IBM is developing a “blockchain” digital money and transfer system for major currencies. Blockchain is the technology that facilitates bitcoin transactions and balances by recording when a particular bitcoin is spent, thereby creating a virtual ledger to prevent double spending and similar problems that could arise without a central authority to prevent them. It allows users to pay instantly and securely without being subject to government regulation.
By expanding blockchain to national currencies, IBM seeks to permit people to make cash transfers or payments without the need for a bank or clearing house, which would save consumers money on transaction costs. Transactions would be recorded in an open ledger for a specific currency, such as the dollar or euro. The company has been engaged in talks with various central banks, including the U.S. Federal Reserve. If the idea is approved, IBM will begin construction on the secure infrastructure necessary to make the digital currency system a reality.
A source familiar with IBM’s project said,
“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.”
Software could be used to link an individual’s bank account to an open ledger, allowing for instantaneous transactions using a digital currency. Central banks would have control over the proposed system since digital currency would be a part of the existing monetary supply. This is a major difference with bitcoin, which is decentralized and independent of national currencies.
Read more here- “Exclusive: IBM looking at adopting bitcoin technology for major currencies,” (Gertrude Chavez-Dreyfuss, Reuters)