My previous article explained cryptocurrencies in a commercial context. This article aims to build on that by looking at the recent trends of cryptocurrencies in the United Kingdom. The Bank of England are considering developing their own cryptocurrency called RSCoin.
Back in 2019 we saw the breakdown of Libra following the United States Congressional hearing where Mark Zuckerberg and his 27 partners had their proposal shot down. Since then there has been greater discussion by Central Banks and other regulators surrounding the implementation of state backed cryptocurrencies.
What is RSCoin?
RSCoin is a cryptocurrency that was created by experts at the University College London and operates on Distributed Ledger Technology – also known as DLT. Blockchain technology is a type of DLT whereby the decentralised database provides public records of transactions between all users.
In a recent paper by UCL the individuals who developed RSCoin described it as a “radical shift from traditional cryptocurrencies to centralize the monetary supply. Every unit of a particular currency is created by a particular central bank, making cryptocurrencies based on RSCoin significantly more palatable to governments.”
The main advantages of the RSCoin are that it “makes monetary policy transparent, allows direct access to payments and value transfers, supports anonymity, and benefits from innovative uses of blockchains and digital money.”
Central Banks are the first stage for the supply of money. Which means they are responsible for issuing currency to commercial high-street lenders (i.e. Banks). By developing and embracing of a new digital currency this could prompt profound change for the interaction between Central Banks and subsequently have an impact on the banking community.
Who is involved?
The Bank of England are currently in talks with several other Central Banks including:
- The European Central Bank.
- The Bank of Canada.
- The Swiss National Bank.
And many more…
According to Fran Boait in The Guardian, the reason for this change is a result of Central banks being “asleep at the wheel over the future of our money system being determined by a small number of banks, payment companies and now tech giants.”
And that the emergence of Facebook’s Libra provided a “much needed wakeup call” for Central Banks like the Bank of England to consider the option of introducing a new form of digital currencies in order to replace or co-exist with the monetary system.
Stay tuned as we follow what happens next!