BSV Blockchain Could Be the Foundation for New Financial Systems: Ulrich Bindseil, ECB

The European Central Bank (ECB) was one of the first out of the box when central banks began experimenting with blockchain and digital currencies.

The European Central Bank (ECB) is one of the institutions that has been among the first to experiment with blockchain and digital currencies.

While many other central banks and financial institutions are still in the process of deciding whether they want to develop central bank digital currencies (CBDCs) or integrate digital ledger technology, the ECB has already completed the investigation phase for the digital euro, launched the European digital sandbox, and even successfully launched eurobonds on the blockchain.

Perhaps it’s no surprise then that Bindseil, together with Columbia University professor and author Omid Malekan, penned a paper on February 18, titled ‘Central Bank Digital Currency: A Comparative Analysis of Architecture Options,’ which recognized the potential of public blockchains to provide markets with “unprecedented efficiency.”

In the paper, they highlighted how there’s no reason the digital euro couldn’t be minted on a public blockchain. Moreover, they argued that so-called ‘permissioned’ or private blockchains are essentially just complex databases, and that public alternatives are superior by many metrics.

Although the paper did highlight some drawbacks of public blockchains, such as the fact they’re open to hacks and could be used to facilitate illicit trade, it also noted how they could support all types of assets and programmable payments and even enable the streaming of money.

To have a central bank at this level recognize how public blockchains are a superior choice to permissioned, private ones is a huge win!

Like the early days of the internet

Just like in the early days of the internet, the blockchain industry has seen the rise of multiple competing networks. We’ve seen BTC, Ethereum, Cardano, Hedera Hashgraph, BSV and others come to the fore, while there are countless numbers of private blockchains entirely controlled by banks or institutions.

However, while institutions will try to maintain as much control for as long as they can, ultimately, if a new financial system comes to fruition, it will have to exist on a single, scalable public blockchain.

The benefits of this are numerous and include global, instant, low-cost transactions, transparency and verifiability, open innovation, immutable record keeping and much greater security. Instead of the cluttered mess of bridges, layers and side chains, everything can and should exist on a single scalable ledger with ultra-low fees. The effect would be similar to the world’s information operating on TCP/IP instead of the numerous walled gardens that competed with it in the early days of the internet.

Unfortunately, today’s crop of popular blockchains simply won’t scale enough to serve as the solution. Ethereum, for example, can’t launch NFT collections without buckling under the pressure, and its proposed solutions, which involve all manner of levers, plugs and pulleys to increase throughput, has ultimately improved nothing and introduced plenty of new problems.

Where, then, should the world turn? Back to the original Bitcoin protocol, which exists today as BSV. This version of Bitcoin mimics the original white paper as closely as possible and has pursued unbounded scaling from the outset. With one million transactions per second in Teranode testing and capabilities for even greater throughput, and standard fees of $0.000001 per transaction, BSV can serve as the base layer for a new financial system and applications like CBDCs.

Ironically, this was Satoshi Nakamoto’s original vision. He was interested in small, casual transactions at scale, including micropayments. Digital gold and stores of value weren’t on his agenda; that all came later when misguided extremists, in their attempt to hoard coins, preferred small blocks at the cost of everything else. The result is what we have today: a mess of unscalable blockchains and closed systems, endless useless tokens and little to show for any of it in terms of utility.

Ultimately, Bindseil is right: public blockchains are superior, and CBDCs could be minted on them. And when it comes to comparing the various options out there, BSV stands head and shoulders above the rest. If unbounded scaling, tiny fees, interoperability, programmability and tamper-proof, immutable transactions are the desired outcome of a CBDC system, there’s no better option.