I’ve decided to build our startup – Veritaseum, a peer-to-peer financial services platform, directly on top of the Bitcoin Blockchain. Many queried why I would voluntarily give up a lucrative advisory and consulting business to chase virtual coins in cyberspace. That’s exactly why I decided to do it. That level of misunderstanding of what is essentially the second coming of the Internet gave me a fundamental advantage over those had deeper connections, more capital and more firepower. I was the first mover advantage holder.
You see, Bitcoin is not about coins, currency or price pops. It is a massive computing network whose sole puropse is to engender and guarantee trust in value transactions between two disprate and untrusting parties. Yes, this does sound dramatically different from what you hear in the media about drugs, ponzis and currency. Do you know why it sounds so different? It’s because most, till this very date, have no idea what the hell they are talking about. Basing our platform on the Bitcon blockchain gives us an enormous amount of power. How much? Try 525 Googles!
Roughly excerpting the reasoning from an article by @EvanderSmart interviewing Balaji Srinivasan, the chairman of the bitcoin hardward manufacturer 21 Inc., it is estimated that Google‘s computing power based on the assumption that they are using 1e7 servers, for 1e7 H/s per Xeon (and ~10 Xeons/server) is 1 PH/s. One petahash equals 1,000,000 gigahash or 1000 terahashes. Bitcoin reached 1 PH/s of computing power/speed on September 15th, 2013.
Twenty six months later it is now averaging over 525 PH/s, or over 525,273,500 GH/s. That’s over a 525x increase! A simple average has Bitcoin’s power growing at nearly 35 Googles (petahashes) per MONTH on an exponential basis! Yeah, that’s right – Veritaseum’s computing power is cooking!
Google’s extant computing power in the cloud represents roughly ~0.0019% of all of the worldwide Bitcoin mining operations that secure Veritaseum smart contracts – and that’s if they were to cease all operations to focus on the Bictoin network. Be aware that Google is, by far, the dominant company on the Internent. This is an additional datapoint that proves bitcoin is the second coming of the Internet.
This computing power disparity is one of several reasons why attempts at building federated, or private blockchains by banks and other independent concerns whose computing power is miniscule compared to that of Google’s, will always pale in comparison to Veritaseum and its public blockchain infrustructre. We will always be bigger, cheaper, faster and more secure.
Of course, that doesn’t prevent others from trying. Microsoft’s Azure is one of three hyper-scale clouds globally. The other two are provided by Amazon Web Services and Google. Microsoft (and I’m sure the other two will follow suit) is marketing the power of its computing cloud services to financial institutions who are looking to build what we already have in Veritaseum – smart contract-powered financial services in the cloud. Reference DERIVATIVES: Microsoft clicks on blockchain:
Microsoft is launching a new service for financial institutions that will enable them to develop blockchain applications for derivatives and securities markets through the software giant’s network of computers.
Called “blockchain as a service” Microsoft aims to provide banks and financial market infrastructures with the ability to develop blockchain solutions “in the cloud”, potentially saving millions in processing costs.
But the question du jour is can you match the cost savings, power and safety of a network that is 525x larger and growing exponentially?
“We want to create an environment for large financial institutions to get involved easily and inexpensively, so that they can compete with fintech companies that don’t have the same regulatory and legacy burdens,” said Marley Gray, director of technology strategy financial services at Microsoft.”
Presumably, they are referring to us [Veritaseum].
Banks are running numerous projects to develop blockchain technologies, which allow counterparties to transfer, value and process trades without the need for an intermediary. Instead, validation is based on members of a network solving complex cryptographic puzzles, for which the computing power required is significant.
This clearly vindicates the statements made at the inception of the Veritaseum efforts as far back as June 2013. Oh yeah, Veritaseum financail smart contracts are available in the here and now…
Processing used to validate cryptographic currency Bitcoin was recently estimated at one exaflop, or a billion billion calculations per second. That is around 1,000 times faster than the processing speed of many super computers. For that reason, scaling of infrastructure is considered one of the most critical barriers to realising the promise of blockchain processing for the financial markets.
Microsoft’s Azure is one of three hyper-scale clouds globally. The other two are provided by Amazon Web Services and Google.
“Our cloud is the size of the other two combined, which means it is a much cheaper environment for running smart contracts based on derivatives,” said Gray.
And all three of the companies mentioned above total to less than one half of one percent of the Bitcoin blockchain’s size, hence, and I quote “which means it is a much cheaper environment for running smart contracts based on derivatives,“. Who has been first to prototype and first to market with such contracts? See video above…
… As blockchain innovation gathers pace, banks are pouring in resources, with an estimated US$1bn budgeted over the next one to two years.
Among initiatives attracting attention, R3 CEV is a New York-based organisation that has signed up 25 financial institutions to promote collaboration and develop standards for blockchain applications in financial services.
In the vendor space, Digital Asset Holdings, run by former JP Morgan executive Blythe Master, aims to reduce settlement latency and counterparty risk through encrypted processing tools, and is focusing on solutions for the paper-intensive syndicated loan market.
“Banks really don’t want to be investing huge amounts of money in computing power and also they can learn a lot from tech companies, which have the knowledge on distributed ledger technology they currently lack,” said Camron Miraftab, a consultant analyst at GreySpark Partners.
This is very true, particularly after the latest regulatory restrictions, global macro environment and where we happen to be now in the banks’ business cycle – portions of which are actually going through a structural change. As a matter of fact, this is a really “Bad Time To Sell Bleeding Edge FinTech To Banks“…
Comparing any single bank’s private blockchain, or even a consortiumof 25 bank’s blockchain to the Bitcoin Blockchain is like comparing an office intranet to the Internet!
What’s the cause of such a disparity? It’s called the Network Effect, and its BIG!