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Bank of England Looks Into 'Centralized' Bitcoin Alternative, RSCoin (thestack.com)
An anonymous reader writes: The Bank of England is working with researchers at University College London to design a Bitcoin clone of its own that can be centrally controlled. It was recently found that the UK's central bank had reached out to university researchers to help it create a cryptographically secure digital currency. The resulting system has now been revealed, and is named RSCoin. The system employs cryptography to obviate counterfeiting and tampering. Unlike other mechanisms, the digital ledger used by the new cryptocurrency is handled exclusively by a central body and will only be made accessible to users in possession of a specific encryption key. Its developers explained that an RSCoin ledger could be published publicly by a central bank, and added that the system's design would also allow a central bank to make transactions entirely, or partially, anonymous.
Once a state backs up a currency with this 'full faith and credit' then it has value. That is something bitcoin lacks.
"...whenever any Form of Government becomes destructive...it is the Right of the People to alter or to abolish it..."
The main reason to even bother with bitcoin is the attraction to its lack of central control and regulation. The other, closely related one, is that it works anywhere and for any purpose.
There's really no other reason to use it than the above. It has technical and practical limitations that normal electronic transfers don't have. Mistakes are forever, scams are rampant, technical understanding of what you're doing is vital if you like keeping your money.
There's no reason to bother with it over something like paypal or bank transfers if you're not into it for the lack of control or philosophical reasons, and a system controlled by a bank would do away with that.
The biggest problem with Bitcoin is that it's fucking awful to actually use it. If you want to run it on your own computer, you need to download a fucking massive amount of historic blockchain data. We're talking GB and GB of data, nearly all of which is absolutely useless for nearly all users. Yeah, you can use some other third party service, but that totally defeats the decentralization of Bitcoin. The reference client is quite shit. Even the network is shitty, since it takes so fucking long to process a transaction, making it unsuitable for most business uses. Then you have its development team which is fighting and bickering all of the time, even now as transactions get slower and slower. Then there are the occasional developer fuckups where the chain ends up at risk of forking and all hell breaks loose. All in all, it's an absolutely awful experience for most users.
It's a lot like desktop Linux or Rust. They sound all sweet and awesome, then you try them and find out that they aren't so useful after all. That's why they see almost no adoption. A small number of loud geeks get all hot and bothered by them, but regular developers and users try them and are very unimpressed. They end up being worse than whatever established alternative is already being used.