Tags: bitcoin | digital currency | virtual payment | economy

Telegraph's Evans-Pritchard: Bank of England to Launch Bitcoin Rival

Telegraph's Evans-Pritchard: Bank of England to Launch Bitcoin Rival

By    |   Monday, 14 March 2016 02:19 PM

A Bitcoin alternative being suggested to the Bank of England “could pose a devastating threat to large tranches of the financial industry, and profoundly change the management of monetary policy,” reports the U.K. Telegraph’s Ambrose Evans-Pritchard.

“The proto-currency known as RSCoin has vastly greater scope than Bitcoin, used for peer-to-peer transactions by libertarians across the world, and beyond the control of any political authority,” Evans-Pritchard wrote.

“The purpose would be turned upside down. RSCoin would be a tool of state control, allowing the central bank to keep a tight grip on the money supply and respond to crises. It would erode the exorbitant privilege of commercial banks of creating money out of thin air under a fractional reserve financial system,” Evans-Pritchard wrote.

“Whoever reacts too slowly to these developments is going to take it on the chin. They will lose their businesses,” Dr. George Danezis, who is working on the design at University College London, told the Telegraph.

"My advice is that companies should play very close attention to what is happening, because this will not go away," he said.  “Deep in the markets there are dark pools buying and selling shares, and entities that facilitate that foreign exchange. There are Visa, Master, and PayPal. These are the sorts of guys that we are going to disrupt,” he said.

University College drafted the plan after being encouraged by the Bank of England last year to come up with a radical design for a secure digital currency. The Bank itself has an elite four-man unit grappling with the implications of crypto-currencies and blockchain technology, the Telegraph reported.

To be sure, many experts have predicted the extinction of the bitcoin itself while the technology behind it will survive, thrive and flourish.

"Bitcoin, the decentralized, mainly digital currency that is neither issued nor guaranteed by central banks, has always seemed like a magic trick. Rather than spinning straw into gold it transforms wasted computing power into money that people will actually accept as payment," Henry Farrell, associate professor of political science and international affairs at George Washington University, wrote for the Financial Times.

"Unfortunately, the magic is wearing off. Some of the technological innovations associated with bitcoin will stick around. The political project will not. Rather than overcoming conventional politics, bitcoin is succumbing to it," he wrote.

The problem is centered around bitcoin's blockchain, which is a public, decentralized ledger that records every single bitcoin transaction.

JPMorgan CEO Jamie Dimon said bitcoin "is going nowhere... There is nothing behind a bitcoin, and I think if it was big, the governments would stop it."

As Dimon said on CNBC last month, "The blockchain is a technology, which we’ve been studying... and yes, it’s real. If it proves to be cheap and secure it will be adopted for a whole bunch of stuff."

Meanwhile, Microsoft reportedly has stopped accepting the virtual currency from Windows 10 and Windows 10 mobile users.

"You can no longer redeem Bitcoin into your Microsoft account," Microsoft posted. "Existing balances in your account will still be available for purchases from Microsoft Store, but can't be refunded."

(Newsmax wire services contributed to this report).

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Telegraph's Evans-Pritchard: Bank of England to Launch Bitcoin Rival A Bitcoin alternative being suggested to the Bank of England "could pose a devastating threat to large tranches of the financial industry, and profoundly change the management of monetary policy."
bitcoin, digital currency, virtual payment, economy
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2016-19-14
Monday, 14 March 2016 02:19 PM
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