“I understand the distinction, but it does leave an interesting question:
If the block chain is unhackable, but all its end points are easily vulnerable, isn’t the currency medium just as vulnerable as if the block chain itself were full of security holes?”
“Yes, I think that question weighs on many minds. Actually, I don’t think blockchain is “unhackable” – every software is hackable – it just hasn’t been hacked yet, or at least, we don’t know about it. But nothing that is connected to the internet is totally secure, never has been, never will. So I think this problem will stay with us.”
As a general rule, most bankers disparage cryptocurrencies, like Bitcoin, as anything but purely speculative instruments. But they don’t disparage blockchain, the technology that underpins cryptocurrencies. On the contrary. They’re pouring money into developing their own “digital currencies,” as they call them. Just don’t call them “cryptocurrencies.”
UBS, BNY Mellon, Deutsche Bank, Santander, the market operator ICAP, and the startup Clearmatics formed an alliance in 2016 to explore the use of digital currency between financial institutions and central banks, using blockchain.
The ultimate goal of the project is to create a digital currency known as Utility Settlement Coin (USC), which will facilitate payment and settlement for institutional financial markets. As the FT reported in October, commercial banks are growing tired of waiting for central bankers to take the lead in fending off the challenge that standalone cryptocurrencies such as bitcoin could pose to their control of monetary policy, and are pressing on with their own pet projects.