March 13, 2015
The evolution of the Bitcoin is a option for currency that I must confess has not become as relevant as the natural need for the almighty dollar. The ability to use other currency forms in business may lead to technological advancements and be a Black Swan or a poorly placed application. Time will tell.
“Reuters reported International Business Machines Corp is considering adopting the underlying technology behind bitcoin, known as the “blockchain,” to create a digital cash and payment system for major currencies, according to a person familiar with the matter.”
The objective is to allow people to transfer cash or make payments instantaneously using this technology without a bank or clearing party involved, saving on transaction costs, the person said. The transactions would be in an open ledger of a specific country’s currency such as the dollar or euro, said the source, who declined to be identified because of a lack of authorization to discuss the project in public.
The blockchain – a ledger, or list, of all of a digital currency’s transactions – is viewed as bitcoin’s main technological innovation, allowing users to make payments anonymously, instantly, and without government regulation.
The free and open use of currency is good. The problem is the loss of funds that cannot be traced or replaced. Since to date bitcoin is not backed by an institution such as Federal Deposit Insurance Corporation (FDIC) what is the remedy for loss? I can see a whole world of under ground and green-market currency applications that may be the ripple in the currency market leading to breaking the proverbial piggy bank.
“The company has been in informal discussions about a blockchain-tied cash system with a number of central banks, including the U.S. Federal Reserve, the source said. If central banks approve the concept, IBM will build the secure and scalable infrastructure for the project.”
The opportunity is seen to open and allows for deeper and wider participation. IBM advances, “Rather than stored on a separate server and controlled by an individual, company, or bank, the ledger is open and accessible to all participants in the bitcoin network.” Is the bitcoin exclusionary or one more layer that keeps the economically disenfranchised from obtaining access to capital? Time will tell.