Bank of England Developing RSCoin to Take on Bitcoin

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The Daily Telegraph in the UK has reported   That computer scientists have devised a digital crypto-currency with the Bank of England that could pose a devastating threat to large tranches of the financial industry, and profoundly change the management of monetary policy.

The system, RSCoin, was designed by researchers Sarah Meiklejohn and George Danezis at University College London, urged by U.K.’s central bank, the Bank of England.

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

“My advice is that companies should play very close attention to what is happening, because this will not go away,” he said.  Layers of middlemen in payments systems face a creeping threat across the nexus of commerce, stockbroking, currency trading or derivatives. Many risk extinction over time.

“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.

In another article at MIT Technology Review it was noted:

Like Bitcoin, RSCoin uses cryptography to create a kind of digital cash that’s resistant to counterfeiting. And in both systems, transactions are verified in a process that adds them to a digital ledger recording all movements of the currency.
The Bank of England is researching how issuing digital currency could make the economy more efficient and stable.

However, Bitcoin’s ledger is maintained by a collection of computers around the world, operated by various people and companies not sworn to any central authority. And its code decrees that there can never be more than 21 million Bitcoins (they are being trickled out over time, and 15 million are in circulation today).

RSCoin’s ledger is solely in the hands of the central bank, which would also retain a special encryption key that could be used to control the money supply—for example, to take actions like the quantitative easing programs the Federal Reserve and other central banks put in place after the 2008 financial crisis.

A paper on RSCoin was presented at the Network & Distributed System Security Symposium in San Diego last month.

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Founder of Blockchain News and The Hackitarians Foundation, Richard Kastelein is an award winning publisher and editor, hackathon organiser and entrepreneur. He has written over 700 articles at Blockchain News, has a massive network in the Blockchain arena and is available as a speaker and consultant. (richard@the-blockchain.com) Kastelein has spoken (keynotes & panels) on technology at events in Amsterdam, Barcelona, Belfast, Berlin, Brussels, Brighton, Copenhagen, Cannes, Cologne, Curacao, Frankfurt, Gdansk, Hollywood, Hilversum, Geneva, Groningen, London, Las Vegas, Leipzig, Madrid, Melbourne, NYC, Oxford, Rio de Janeiro, Sheffield, San Francisco, San Jose, Sydney, Tallinn, Vienna, and Zurich. A Creative Technologist & Canadian (Dutch/Irish/English/Métis) his career began in the Native Press (Canadian Arctic) and he later spent a decade in the Caribbean media. Currently, he writes occasionally for Wired Insights, Guardian & Virgin and his articles have been translated into Dutch, Greek, Polish, German & French.