Is the concept of "experimenting with a digital dollar" the financial services industry's version of the hula hoop? Flash in the pan sizzle that will soon crash and fizzle?
Bank of Canada has put its toe in that digital dollar water by announcing this week that it was working with one of the largest banks in the land (of Canada) to create its own electronic version of the Canadian dollar: CAD-COIN, a blockchain-based digital fiat currency.
While this experiment is still in its early stages, Carolyn Wilkins, senior deputy governor for Bank of Canada, did reveal a bit of what this plan entails. Her statement indicated that, while the bank is testing the concept, the reality is far off.
"One of the bank’s many FinTech research projects ... is to build a proof-of-concept wholesale interbank payment system using a distributed ledger, in conjunction with Payments Canada, R3 and Canadian banks," she said in a statement. "The bank’s goal in these projects is solely to better understand the technology firsthand. Other frameworks need to be investigated, and there are many hurdles that need to be cleared before such a system would ever be ready for prime time. None of our experiments are to develop central bank-issued eMoney for use by the general public. These are still conceptual research questions that are being investigated by many central banks."
Oh yes, and of course, it is all about speeding up how money is moved across FIs.
But Canada isn't the only one this week eyeing an alternative digital currency.
Tokyo Wants A Piece Of The Digital Currency Pie, Too
The bank is reviewing its own digital currency option that uses the same underlining technology. This report comes after a local newspaper reported that the bank would issue virtual currency next year, but the bank has since come out and said it hasn’t made any official decisions. And in a confusing turn of events, the bank didn’t deny that it’s making its own digital currency but did note there was no formal announcement. In fact, the bank actually confirmed the digital currency experiment plans.
“Regarding the speculation [in] media reports, these reports are not based on any announcement by MUFG, and the details have not been decided,” the bank’s spokesman said in an emailed statement to Reuters. “However, we can only say that it’s true that MUFG is conducting demonstration experiments on the ‘Coin’ within the company, utilizing a blockchain technology.”
The bank is also reportedly planning on enabling its customers to take money from their accounts via a smartphone app. That money will then be converted at a one-to-one ratio between the “coin” and yen. Essentially, what the bank coin system will do is act as prepaid digital money, which is already used in the region.
But that wasn't all that happened in the bitcoin ecosystem this week, of course, as the major news was still about just how high bitcoin will go.
So, How High Will It Go?
Wouldn't everyone thinking about getting their hands on some bitcoin like to know?
As of Thursday evening (June 16), bitcoin's price was at $774.70. To put that into context, that's about $70 above what its price was the week prior, which was already a major jump. The reason cited for bitcoin's latest jump was from the coming “halving,” which is an adjustment to bitcoin’s design in order to control how new bitcoin can be created. This event is expected to occur in roughly 23 days.
Bitcoin hasn’t been priced this high since Feb. 2014. That high was actually a low point. Bitcoin was worth more than $1,200 in Nov. and Dec. 2013.
When bitcoin was first released, a cap was placed on how many bitcoin could ever be produced. That magic number is 21 million bitcoin, and 15.7 million bitcoin have reportedly been mined. While it’s not known what might happen after this halving goes into effect, many speculate that, if supply is cut, prices will jump.
Bitcoin's latest price surge shows a 30 percent price spike for the week and is currently trending at a 200 percent spike for the year. A year ago, bitcoin was only around $230.
For now, bitcoin is floating on a 28-month high, begging the question: When will the next low come, and how low will bitcoin go when it inevitably drops after the halving event chatter calms down?
For now, bitcoiners can rejoice in wondering just how high it will go. Will it top that magic $1,200 mark again?