[Cryptography] IBM looking at adopting bitcoin technology for major currencies

John Levine johnl at iecc.com
Fri Mar 13 16:16:10 EDT 2015

>"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."

Actually, it's more like a mutant ETF.

ETFs hold a pool of assets, which can be anything from the S&P 500 to
gold bars to (if the Winklevoss twins get their application approved)
bitcoins.  Shares of the pool trade like any other stock.  To ensure
that the price of the ETF stays close to the underlying asset, the ETF
contracts with what usually have the pretentious name Authorized
Participants, large investors who can swap a large block of ETF shares
for a basket of the underlying assets or vice versa to arbitrage any
price differences.

I don't think that any normal investors or businesses would be
interested in a dollar denominated blockchain unless they were
confident they could turn their blockchain entries into real dollars
in a real bank, with the level of confidence that they have in the
financial intermediaries they use now.  So you'd need entities in
there who waer sufficiently credible and had a way to turn dollars
into new blocks, and to turn the blocks back into dollars.  That means
large banks, perhaps the central bank.

By the time you do that, they might as well also do what Phill's
notaries do, and it's starting to look a lot like an ordinary digital
currency where the transactions are handled by the issuing bank.  So
other than the sprinkling of bitcoin pixie dust for the easily
distracted, it's hard to see how this would be a good idea, other than
as an excuse for lowering the fees on electronic money transfers.


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