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According to the Chief Financial Officer of the Bank of England, the technology behind the central bank’s digital currencies (CBDCs) could be tens of thousands of times more efficient per transaction than bitcoin.
During his speech at the Future of FinTech conference on Thursday, Tom Mutton gave attendees an overview of the Bank of England’s current position on CBDCs. Much of Muttons’ speech reiterated the Bank’s uncommitted interest in the development of a CBDC and its purported commitment to keep liquidity available for as long as [people] wish to use it, but he also touched on comments from a 2020 CBDC survey conducted by the Bank.
Mutton provided the Bank of England with counterpoints to concerns raised in the investigation, including the need to preserve privacy, increase public confidence and ensure fair access to technology.
He also addressed concerns about energy and the environment, saying:
Bitcoin, given its underperformance and energy inefficiency, is by no means a relevant comparison for the kind of technology we might be using in a central bank digital currency.
Mutton urged environmentally conscious British citizens not to throw out the blockchain baby with the Bitcoin bathwater.
Muttons’ remarks come as bitcoin and other proof-of-work cryptocurrencies are hotly debated for their impact on the environment. As companies like Tesla reverse their stance on bitcoin payments over concerns about the carbon footprint of bitcoin mining, central banks are forced to consider the environmental impact of even theoretical CBDCs like the Bank of England.
According to Mutton, the Bank of England’s CBDC could play a role in the country’s transition to a net zero economy. To do this, Mutton stressed that energy efficiency should be a key consideration in the design of the CBDC and be equipped with data and analytics technology that will allow the central bank to optimize the financial system for qu ‘it is as energy efficient as possible.
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