New cryptocurrencies are emerging almost daily, and many interested parties are wondering whether central banks should issue their own versions. But what might central bank cryptocurrencies (CBCCs) look like and would they be useful? This feature provides a taxonomy of money that identifies two types of CBCC – retail and wholesale – and differentiates them from other forms of central bank money such as cash and reserves. It discusses the different characteristics of CBCCs and compares them with existing payment options.
In less than a decade, bitcoin has gone from being an obscure curiosity to a household name. Its value has risen – with ups and downs – from a few cents per coin to over $4,000. In the meantime, hundreds of other cryptocurrencies – equalling bitcoin in market value – have emerged (Graph 1, left-hand panel). While it seems unlikely that bitcoin or its sisters will displace sovereign currencies, they have demonstrated the viability of the underlying blockchain or distributed ledger technology (DLT). Venture capitalists and financial institutions are investing heavily in DLT projects that seek to provide new financial services as well as deliver old ones more efficiently. Bloggers, central bankers and academics are predicting transformative or disruptive implications for payments, banks and the financial system at large.
Lately, central banks have entered the fray, with several announcing that they are exploring or experimenting with DLT, and the prospect of central bank crypto- or digital currencies is attracting considerable attention. But making sense of all this is difficult. There is confusion over what these new currencies are, and discussions often occur without a common understanding of what is actually being proposed. This feature seeks to provide some clarity by answering a deceptively simple question: what are central bank cryptocurrencies (CBCCs)?
To that end, we present a taxonomy of money that is based on four key properties: issuer (central bank or other); form (electronic or physical); accessibility (universal or limited); and transfer mechanism (centralised or decentralised). The taxonomy defines a CBCC as an electronic form of central bank money that can be exchanged in a decentralised manner known as peer-to-peer, meaning that transactions occur directly between the payer and the payee without the need for a central intermediary.3 This distinguishes CBCCs from other existing forms of electronic central bank money, such as reserves, which are exchanged in a centralised fashion across accounts at the central bank. Moreover, the taxonomy distinguishes between two possible forms of CBCC: a widely available, consumer-facing payment instrument targeted at retail transactions; and a restricted-access, digital settlement token for wholesale payment applications.
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Posted in BIS, Blockchain, Report Tagged with: Bank for International Settlements, Bitcoin, Blockchain, Central Bank, Cryptocurrency
Crypto prices rally
The story of Q2 begins with a rally that saw the total value of all cryptocurrencies rise to $100 billion, up from $25 billion at the start of the quarter.
Another way to put it is that the total market value of blockchain tokens skyrocketed 4x to an all-time high above $100 billion.
ICOs emerge as ‘killer app’
ICOs helped propel this growth and established a powerful trend in Q2.
The supply of new tokens exploded and crowdfunding and investment returns stunned the world. (To track the escalating funding totals, CoinDesk even went so far as to launch its own dedicated ICO tracker, a free tool that tallies fundraisings via the mechanism).
One useful metric that underlines ICO dominance is how much more successful ICOs were versus traditional VC funding in the blockchain industry.
Mixed sentiment around ICOs
As part of the State of Blockchain, CoinDesk conducted a sentiment survey designed to leverage the insights of its global readership.
This quarter’s survey had over 1,300 respondents, and it served to capture the unease some investors felt as the blockchain use case took off.
In 2017, bitcoin’s total domination of the ecosystem shrunk considerably.
At the start of the year, bitcoin represented almost 90% of all the value in cryptocurrencies. By the end of Q2, that number tracked down to almost 41%.
Posted in CoinDesk, Report, Strategy, Technology Tagged with: Bitcoin, Cryptocurrency, Etherum, Hyperledger, ICO, VC
Plus mature et diversifié, le marché du bitcoin s’est distancé progressivement de l’économie informelle et du « web de l’ombre ». Les activités illégales, qui représentèrent jusqu’à la moitié des volumes, n’en pèsent plus que 3% à 6%.
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Posted in Les Echos, Technology Tagged with: Bitcoin, Blockchain, Cryptocurrency