RE: Blockchain Technology Potential (Series 1) – A Review of a Recent PAYPAL CryptoCurrency Patent Filing and What It Means for the Future of the Technology
Paypal already does instant payments. They will most likely be using this in the distant future as a financial setup as it can be a big help by being the chain for the transactions. It's basically an easy-to-use fintech framework and easy to pay policy. This isn't about instant transactions. This is about speeding up clearing & settlement, distributing payments, portfolio management + reporting, distribution, collateral management and fraud measures.
From what I have noticed since entering crypto in 2012 when BTC was dirt cheap, the internet will eventually adopt a currency 'virtual currencies' (they will not be referred to as cryptocurrencies.) These virtual currencies will be backed by USD. Paypal is experimenting with the all the blockchain possibilities. Paypal actually tried to make their own "Bitcoin" back in the day but they couldn't solve the double spending or the Byzantine Generals problem. Satoshi hasn't really solved the Byzantine Generals Problem except in the face of Sybil attack, but he got as close as one can get since Bitcoin is essentially Byzantine resilient at 51%. Before Satoshi's efforts, Byzantine models were around 33% resilient. This was not good enough. If we look at Ripple they are most likely under 20% resilient on their best day. Stellar is most likely more resilient than 20% on their worst day. In my opinion, we are 4 years away from anything spectacular and once it's spectacular we will never hear about it again because it will be behind the scenes. Crypto doesn't work for ecommerce for many reasons. In it's simplest form, merchandise returns would be a major headache. Furthermore, these patents are not worth the paper they are printed on. Bank of America has something like 600 blockchain patents. It's just apart of Corp America. You can be sure all banks will fork the open source code and make it their own. Doubt they will even credit the source code ;)
Thanks for the detailed and very thoughtful response. Yes indeed Paypal does have instant payment. And digital currency payments have been going on over the Internet for a long time. Blockchain does introduce a slightly different paradigm and is potentially cheaper transfer than prior methods. But is not instant for current blockchains in production and that was what the patent was attempting to address. Yes indeed BOA do have a few patent applications in this space as well. I looked at a few in the past but none of them so far look like game changers either.
Regarding Ripple and Stellar, if you have all your nodes permissioned and trusted the Byzantine Generals problem becomes less likely to be a security issue. I mean which of the IBM nodes that currently make up most of Stellar's nodes will be attacking the network? But then you have a centralized solution. So its like there currently is a trade off matrix between scale, speed, decentralization, and high security where you cant get all 4 at once at this time in any current production blockchain.
I wouldn't lump Ripple and Stellar together. A lot has changed. Stellar is running on new code and algorithm. Unlike, Ripple, they designed the system to be fully responsive, but not at the expense of correctness. Stellar's new consensus protocol takes things to the next level with their Federated Byzantine Agreement approach. With this, each node chooses its own quorum slices. The slice selections and nodes are required to maintain a balance between liveness & safety. It's undeniably the 1st provably safe consensus mechanism with the four key properties (1)decentralization, (2) low latency, (3) flexible trust and (4) asymptotic security) working simultaneously. It's better than any mechanism including POW - POS - Tendermint - Byzantine Agreement. I am willing to bet we will see a major shift with many dapps moving over and utilizing the SCP. The possibilities are endless if it scales like it should. We shall see.