Spokesmen of the Federal Reserve and the Bank of England have given complements to Bitcoin’s blockchain innovation over the past year.
Now IBM seems to be working on a blockchain of their own – to work with existing national currencies and banks. Although still not official, an IBM insider told Reuters that the tech giant is working on its own version of the Bitcoin’s open decentralized ledger, but without its own tokens, rather working with existing (central) banks and their respective currencies.
We assume that “IBMCoin” will not have “mining” (instead, central banks would be controlling the creation of currency, as they do with non-digital currencies) and although the network will be decentralized, we assume it will only run on servers set up by IBM.
Note that the Internet has been crying out for a good payment method since the founding of the HTTP protocol. Among the original HTTP error messages was one called “402 Payment Required”, while a good method of payment was still to be developed. It wasn’t until the mid 1990’s that credit cards (a 1950’s technology!) were adopted for use on the Internet – with mixed results and without support for micro-payments.
Once bootstrapped, the IBM network should be an improvement on current fees, delays and security risks of legacy transaction clearing systems – bank wires, ACH, credit cards, etc. However, it would also come with “money laundering” concerns currently attributed to Bitcoin, while also adding privacy issues for the rest of us, as well as at least a possibility of a hacking or a denial-of-service attack.
Even if the IBM network will become a true competitor to Bitcoin in the market for transfer-of-value and/or programmable-money (muti-sig, pay-to-script, timelock, etc), the protocol would not make national currencies a more competitive store-of-value, since their supply would be still controlled by central banks and inflationary.
Neither is this the IBM project the first attempt to decentralize transaction-clearing of national currencies. For example, there is the Ripple network that claims to transfer any and all currencies, and the Tether token, redeemable for $1 USD each, just to name a few.
Bitcoin technology is definitely going from a “fringe” to “mainstream” – not through lobbying groups but on the merit of its utility. How the Bitcoin ecosystem will transform the “mainstream” players or politics is another discussion.
Photo by Agê Barros on Unsplash