The implications of putting central bank-backed fiat currency on a distributed ledger such as Blockchain are profound.
A report sets out the implications for management of an economy, the potential to reframe
the decentralized consensus debate, and how such a change could assist implementation of Blockchain 2.0 technology into the capital markets.
Celent has released the new report titled Fiat Currency on a Blockchain: Assessing the Impact of Combining Blockchain Technology with Central Bank-Backed Currency.
The potential benefits to central banks / governments / regulators of fiat currency on a Blockchain are profound. In broad terms, all transactions within an economy could be tracked on a real-time basis, providing granular, bottom-up information on the economy.
There would be acceleration away from physical cash and a movement towards micropayments. Very small transactional payments (say, $0.00001), which are not cost-effective in legacy payment systems, would be possible. The knock-on implications of this in terms of democratizing content online are significant and are likely to be leveraged into the Internet of Things, where precise costing of usage of devices may be critical.
Finally, the regulators could begin to wrestle back control of the Blockchain technology debate and design their own blueprint of distributed ledger architecture. Exploring this area provides additional perspectives on how Blockchain 2.0 technology could evolve to accelerate its adoption into capital markets.
“Many issues related to Blockchain remain unclear, and we are still in the early evolution of the story. However, the next big question relates to implementation and putting off-chain financial assets onto a distributed ledger. For a variety of reasons, central bank-backed cash on a Blockchain-type ledger could assist with this migration,” says Dwyer.
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