- The Digital Pound is up for debate, but there is not much agreement.
- ‘Britcoin’ might not even end up on the blockchain.
- It will offer privacy, which the U.S. equivalent seems to be lacking.
The UK is one of several countries well on their way to bringing out a Central Bank Digital Currency (CBDC). However, there is a long way to go as arguments keep breaking out around the designation of the Digital Pound.
The Bank of England team behind the creation of the Digital Pound is debating if the coin should even operate on distributed ledger technology (DLT), such as blockchain. Other aspects in the discussion are the privacy elements, with the consensus being that ‘Britcoin’ should be pseudonymous.
What Technology Will Britcoin Run on?
It appears that no one knows what blockchain the Digital Pound will run on, or in fact if blockchain will even be involved.
Tom Mutton, who heads the Bank of England’s CBDC project, said, of a meeting of technologists hosted by the Bank to discuss how a digital pound might be designed, “none of them agreed with each other at any point.”
The Bank of England, as well as His Majesty’s Treasury, are at the stage where they are seeking feedback from the stakeholders and technology experts on the design of the CBDC.
The feedback is open until June 30. With time fast running out, and no consensus being reached on the core design, there appears to be a long way to go.
That being said, the Bank says it plans to trial several different versions of ledgers, including public blockchains like those that underpin Bitcoin. Yet, there is still a strong pull to utilize traditional payment rails for such a digital coin, even though fans of crypto and blockchain say it would be inefficient and backward-facing.
“We definitely want to be compatible with distributed-ledger business models in the private sector, but we were not convinced that distributed ledgers offered more efficiency over conventional ledgers,” Mutton said. “It’s very much open.”
Will Britcoin be a Tool for Financial Surveillance?
One thing that we do know about Britcoin, is it would be focused on offering privacy to users and won’t collect personal data. Mutton explained the Central Bank would focus on providing the infrastructure, while the private players would be responsible for the innovation.
“There will be no data shared with the Bank of England, we will know what transactions have happened but we will have no data on the individual who did it. While the wallet provider would have the user data but won’t have access to their transaction data,” Mutton said.
Across the Atlantic, we have seen strong opposition in on both sides of the political divide. Presidential hopefuls Ron DeSantis – for the Republicans – and Robert F. Kennedy Jr. – for the Democrats – are both in opposition to a Digital Dollar.
The belief is a CBDC in the U.S. would lead to financial surveillance and political interference in spending.
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