Malta joins the alternative led by the company Clearmatic (Where we find among its advisor to Vitalik Butering) Because increasing speed and reducing costs for the user is one of the new challenges of banking entities. In addition to being subject to the Blockchain concept, until now synonymous with security and trust, something that banks have lost after the Crisis of 2008.
The history of USC began in September 2015 when the Swiss bank UBS, together with the firm Clearmatics, announced the development of its own virtual currency, the USC. Since then, other banks have joined this proposal: Deutsche Bank, Santander and BNY Mellon, Barclays, Credit Suisse, HSBC and others in 2017. The idea seems to have unified the traditional players in this innovative company to create a new digital currency based on Blockchain. UBS is currently involved in discussions with regulators and expects USC to become operational in 2018.
The objective of this banking consortium is to develop a simplified Blockchain payment solution for interbank transactions, that is internally, we will not see it. We have already seen central banks that have advanced and created their own cryptocurrencies with more or less success Tunisia (DigiCash / eDinar / BitDinar), Senegal (eCFA).
The reality is that the world we live in and financial services and the banking sector must adopt and evolve to accept that change is inevitable. The crypto-world is fast-paced and very fluid, with new innovations that make it up every day.
In the case of USC, it is more an internal Blockchain solution than a distributed ledger similar to the more popular cryptocurrencies like Bitcoin or Ethereum. However, what makes USC attractive to central banks and conservative regulators is that they are backed by liquid assets belonging to large banks and central banks. USC will be a digital currency weighted against the fiduciary currency in the corresponding jurisdiction. Consequently, the USC spending will be identical to the expenditure of the physical currency with which it is exchanged.
Therefore, the idea behind a USC is that it will be convertible with other fiduciary currencies, which allows it to be more easily interchangeable between institutions in different countries and used as a more efficient means of payment and settlement. Having a currency based on Blockchain will also reduce the transaction risk and make the exchanges immune to manipulation. This is facilitated by its characteristic as a common currency between banks, as well as by its underlying infrastructure of Blockchain.
The USC could eventually bring unregulated cryptocurrencies as we know them today, because the currency is centralized, regulated and backed by assets, providing greater protection to the consumer and the investor. The decrease in risk will reduce the astronomical returns we have seen in Bitcoin, Ethereum, Litecoin and others in recent months.
“It can inform the way central banks choose to move forward,” HSBC financial technology innovation director Hyder Jaffrey told Coindesk. “We see it as a springboard into a future in which central banks issue their own cryptocurrency at some point.”
The fact that banks are playing with the idea of using USC demonstrates a shift towards future cryptocurrencies to be used as a means of exchange, rather than a speculative investment vehicle.
Although USCs are not offered to consumers as a purchasable cryptocurrency, their precedent may be a threat to Bitcoin and other cryptocurrencies. Future banks may wish to create more ‘genuine’ cryptocurrencies backed by assets that are immune to credit risk, and offer them to consumers as an alternative to hyperspeculative virtual currencies like Bitcoin.
Writer by birth, curious by profession … I learn a little more every day from the cryptocurrency.