Bitcoin may soon have a new competitor in the digital currency space wanting to capitalize on the technology driving the currency — the blockchain.
IBM is looking into using the blockchain to create its own digital currency payment system, Reuters reported, citing an unnamed source. The blockchain is the distribution ledger that records a bitcoin transaction over the exchange network, which runs the bitcoin software. The blockchain allows for money to be transferred using the blockchain technology, which cuts out the middle man (like a bank) when getting the funds transferred — cutting down on the time and money it costs to send that money from one network to another.
Much like how the ledger is open to network participants, IBM’s potential new currency system would act in the same regard — minus the bitcoin. Instead, it would be a regulated digital currency. The unnamed source told Reuters that IBM has been in discussions with central banks, including the U.S. Federal Reserve. The source indicated the new digital currency would save the government and its users time and money. That same point has been echoed by other blockchain enthusiasts who have tried to expand the technology’s adoption.
“When somebody wants to transact in the system, instead of you trying to acquire a bitcoin, you simply say, here are some U.S. dollars,” the source told Reuters. “It’s sort of a bitcoin but without the bitcoin.”
While the source didn’t divulge all the details, there is indication that the digital currency would also have the ability to be connected to a user’s bank account so that there could be a seamless transfer between physical and digital money. The concept is said to be in early development stages, but because the system would be controlled by the central banks, there may be more widespread support to engage with this digital option.