March 19, 2015
Well, not quite – but wouldn’t that be convenient? All too often I find myself plagued by the fragile pieces of paper we assign so much importance to. I guess Wu-Tang was right – cash rules everything around me. So why, in an age where almost anything you can think of has a digital counterpart or replacement, is physical cash still such a prevalent thing? Its actual value is ethereal, so wouldn’t it be more efficient to have a currency based in a non-physical space. Well, according to certain sources, IBM seems to be on a similar page.
Reuters reported that International Business Machines Corp (IBM) is looking to adopt the concept behind the popular crypto currency Bitcoin. This concept, known as blockchain, is a ledger (or list) of all of a digital currency’s transactions. Bitcoin utilized this to allow users to make payments instantly and anonymously, without government regulation. Rather than stored on a separate server and controlled by one individual or entity, the ledger is accessible to all participants in the Bitcoin network. IBM’s objective is to allow for cash transfers & payments to be made instantaneously, without the involvement of a bank or clearing party. The transactions would be in an open ledger for a specific country’s currency.
Here is an illustration highlighting blockchain as a concept:
If this project does come to fruition, it promises to bring many conveniences that improve on the flaws of physical tender. Paper money is dirty, easily destroyed, and can take up a lot of space. The hubris accompanied by the tearing of that valuable moolah through a simple twitch or movement is heart breaking. Physical money is also easily stolen. The only thing keeping that wad of paper happiness in your pocket from a malicious delinquent is your wallet and – well– you. Not only would IBM’s solution be more cost effective for all parties involved, it would also provide an cure to the problems with physical cash that haunt us on a daily basis.
"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 said. "It's sort of a Bitcoin but without the Bitcoin… These coins will be part of the money supply," the source said. "It's the same money, just not a dollar bill with a serial number on it, but a token that sits on this blockchain."
IBM has been in informal discussions with multiple central banks about the possibility of a blockchain cash system, one of them being [unofficially] the U.S. Federal Reserve. Theoretically, the banks would act as a sort-of ‘overseers’ for an open ledger viewable by everyone in the system, and transactions would be made through an agreed-upon process. Users would be able to access this through a linked bank account and possibly a wallet application. IBM would handle the creation of a secure and scalable infrastructure for this system.
The project is still in its early development stages and bound to change. Money-laundering and criminal activities are also a possible issue, but solutions for these will most likely be found before any public implementation.
(Sources: Reuters; IBM)