According to Deloitte, which has outlined the concept of a Bitcoin-like system, financial institutions would act as uncompensated miners for a ledger governed by a central bank.
In such an instance, the central bank would, in theory, have control of the money supply, and the currency on the network would be declared legal tender and linked with whichever fiat currency the central bank issues.
The idea of a central bank-backed cryptocurrency has been floated in the past, as shown by concepts like Fedcoin and comments by the central bank of Singapore.
Of course, there would be key differences between Bitcoin and Deloitte’s hypothetical central bank cryptocurrency. For example, there would be no limit on the number of network tokens, whereas Bitcoin is designed with hard cap of BTC 21 million.
The central bank would also control development and determine which entities verify transactions. In addition, banks would provide user-facing services like wallets, although according to Deloitte, users would retain control of private keys.
Deloitte concludes that while a central bank-backed cryptocurrency may not replace Bitcoin or any other virtual currency or paper fiat currency in its entirety, as the concept could one day form part of a broader ecosystem of digital currencies.
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