The project has been informally discussed with a number of central banks, including the U.S. Federal Reserve. The source said:
“It’s sort of a bitcoin but without the bitcoin. These coins will be part of the money supply. It’s the same money, just not a dollar bill with a serial number on it, but a token that sits on this blockchain. We are at a tipping point right now. It’s making a lot more sense for some type of digital cash in the system, that not only saves our government money, but also is a lot more convenient and secure for individuals to use.”
The bitcoin blockchain is a public ledger without a central authority, replicated on millions of personal computers and devices worldwide, which keeps track of all bitcoin transactions ever made. Bitcoin transactions are anonymous in the sense that the owner of a bitcoin address is not identified explicitly. However, the authorities have been able to use sophisticated analysis techniques to trace back bitcoin addresses to their owners and uncover illegal activities on the blockchain.
If bitcoin transactions are permanently recorded and bitcoin addresses can be traced back to users, then bitcoin transactions are less — not more — anonymous than other transactions, which from the point of view of the state is a plus.
The “tipping point” mentioned by the unnamed IBM source refers to the fact that the mainstream financial and political establishment is warming up to the underlying technology of bitcoin, which permits cheaper and faster transactions, permanently recorded in the blockchain and impossible to counterfeit.
Representatives of the U.S. Federal Reserve and the Bank of England have recently expressed support for the idea that central banks should create their own centrally controlled implementations of bitcoin, and the Finance Minister of Greece has put forward the idea that troubled economies like Greece’s could benefit from a bitcoin-like digital currency. Meanwhile, the government of Ecuador is already rolling out its own digital currency.
The recent wave of high profile venture capital investments in bitcoin companies (last example here) also shows that bitcoin is here to stay. It seems that the time of bitcoin-like digital currencies issued and controlled by governments is coming. “if you can’t stamp out cryptocurrency, might as well build your own,” says a commentary on Gizmodo.
IBM is betting on that, and so should investors. If IBM becomes the preferred partner of governments and central banks for next-generation fintech based on bitcoin technology, the payoff could be huge.
