Bank of England not involved in new digital currency

After reports earlier this week claiming that the Bank of England had been working on the creation of a digital currency, 'RSCoin', with a London university, the two researchers behind the project have now said that the Bank of England is not formally involved in any way. However, the project was inspired by the central bank's digital currency research agenda. The significant difference between Bitcoin and RSCoin is that while Bitcoin uses the solving of complex mathematical problems to authenticate transactions, transactions conducted on the RSCoin platform do not require the solving of a problem, only central bank approval.

A new report from CoinDesk suggests that RSCoin – digital currency with more centralized design – has, in fact, been developed independently of the Bank of England.



Previously it was reported that RSCoin was created by researchers Sarah Meiklejohn and George Danezis at University College London, at the suggestion of the BoE.



Speaking to CoinDesk, Danezis and Meiklejohn clarified that the project has been conducted independently of the UK central bank.



"I'd like to make it clear right away ... that the work was absolutely not funded by the bank," Meiklejohn said, adding that it did not speak to the bank prior to embarking on the effort.



However, they added that the project was inspired by the central bank's digital currency research agenda.



The RSCoin whitepaper explains that RSCoin adopts properties of other online payment systems, such as those of credit cards and cryptographic e-cash. However, what differentiates it from bitcoin is the function of the network validators, or mintettes.



The paper says, "In its simplest form, the RSCoin system assumes two structural entities: the central bank, a centralized entity that ultimately has complete control over the generation of the monetary supply, and a distributed set of mintettes that are responsible for the maintenance of the transaction ledger.”



“Each mintettes maintains a set of lower-level blocks, and (possibly) communicates with other mintettes (either directly or indirectly). At some point, the mintettes send these blocks to the central bank, which produces a higher-level block. It is these higher-level blocks that form a chain and that are visible to external users”, the paper reads.



It says that RSCoin seeks to achieve a scalable cryptocurrency that can be deployed and whose supply can be controlled by one central bank, as well as to provide a framework that allows any central bank to deploy their own cryptocurrency.