Re:How do bank payments actually work?
by ZenoArrow on Wednesday January 20, 2016 @10:13AM
(#10938566)
The advantage of using a trusted intermediary over blockchain technology is in bandwidth.
With blockchain technology you have multiple copies of the transaction ledger. Each transaction is recorded in every copy of the ledger. This multiplies the required bandwidth to keep these ledgers up to date. This creates a scalability problem, which is a problem that cryptocurrency developers are actively working on.
Compare this to a centralised system and you can see that the bandwidth to keep the banking systems in sync is far lower.
Blockchains have many advantages, but they aren't perfect, you effectively give up some efficiency for the advantages of decentralised trust. Considering the volume of transactions these banks deal with, they can't really give up on efficiency without impacting their bottom line.
With blockchain technology you have multiple copies of the transaction ledger. Each transaction is recorded in every copy of the ledger. This multiplies the required bandwidth to keep these ledgers up to date. This creates a scalability problem, which is a problem that cryptocurrency developers are actively working on.
Compare this to a centralised system and you can see that the bandwidth to keep the banking systems in sync is far lower.
Blockchains have many advantages, but they aren't perfect, you effectively give up some efficiency for the advantages of decentralised trust. Considering the volume of transactions these banks deal with, they can't really give up on efficiency without impacting their bottom line.