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The Bank of England’s initiative to launch the UK’s digital currency has gained traction recently with the Treasury and the Bank of England’s active involvement in this development. This initiative dates back to an initial working group set up by Prime Minister Rishi Sunak in 2021 the then Chancellor of the Exchequer. He proposed to the Bank of England to explore the possibility of a central bank-backed currency and suggested the name “Britcoin”. This digital currency would be denominated in pounds and offer reliability and confidence to businesses and consumers. The value of this digital pound is expected to be stable over time and will only be programmed in particular circumstances. Cryptocurrencies have been a crowd favorite for players on popular sites such as www.wetten.com, and Britcoin could be a new potential option for them.
About Britcoin
Britcoin is a potential new digital currency that would be issued and backed by the Bank of England and the UK government. Unlike most cryptocurrencies, Britcoin would be a stablecoin, meaning its value would remain constant and consistent, just as a £10 Britcoin banknote would be worth £10. It would be based on blockchain technology and stored in a digital wallet that can be accessed via smartphones or smart cards. Private companies will likely issue these wallets, which may charge fees to hold the currency. In addition, the digital pound will co-exist with cash and bank deposits, rather than replace them. There could also be restrictions on how much currency a person or company can hold.
Why Launching Britcoin?
The launch of Britcoin in the United Kingdom can create a major buzz in the cryptocurrency market. Britcoin is designed to be a decentralized digital currency that can reduce the financial burden of traditional banking. The implications of launching Britcoin in the UK have the potential to draw more investments, revolutionize the traditional payment system and offer users a safe and affordable way of payment and transferring funds. Britcoin can also open up the possibilities of global economic transactions by allowing fund transfers across geographical borders without any expensive fees and conversion rates. This will have a long-term impact on the financial landscape as well as on international trade.
Cons and Benefits of Britcoin
Cons
- Britcoin is likely to be a highly volatile currency and its value can fluctuate significantly. Investments around it during the starting days would be potentially risky.
- Britcoin, being a new cryptocurrency might not be regulated enough. This could trigger a sloppy parallel economy, unaccounted transactions, and illicit trades.
Benefits
- Unlike other crypto-options such as Bitcoin, Litecoin, Ethereum, etc, Britcoin is an initiative from The Bank of England. Though the transactions around it could be unsupervised, similar to all crypto payments, we could expect Britcoin to be more secure.
- Compared to traditional banking options, Britcoin transactions have low fees, which is great for frequent payments.
- Britcoin can be accessed from anywhere in the world. However, the acceptance and legalities around any cryptocurrency are subjected to national policies and federal regulations across geographic boundaries.
The Expected Time of Arrival
The Bank of England’s public consultation on the potential introduction of Britcoin is just the first step towards introducing a new currency. It is expected to take around four months. The BOE has yet to decide whether or not the currency will be pegged to the Pound Sterling or completely independent. The BOE’s research and assessment of its security, privacy, and accessibility issues are important considerations as this is an opportunity for the public to help shape the future of the country’s financial system and voice their opinion on whether or not a new digital currency should be introduced. Once the consultation is complete, the BOE will enter a design phase that is expected to last until at least 2025. This will involve significant investment to launch the currency during the latter half of the current decade if the Bank decides to proceed with the project.
