The International Business Machines Corp (NYSE:IBM) could tap into bitcoin’s technology known as blockchain to provide digital support for some of the world’s major currencies. The concept is expected to help in lowering transaction costs. Unlike bitcoin, IBM’s digital currency system would allow oversight by central banks.
International Business Machines Corp (NYSE:IBM)’s move into digital currency would see the company provide support for instantaneous payments and transfer of cash without the input of banks. That way, the company hopes to enable people to save on costs of transactions, according to the people with insider knowledge.
For its virtual currency system, IBM targets major world currencies such as the dollar and euro. The digital currently system would be based on a technology similar to that of bitcoin’s blockchain where an open ledger is used. Blockchain is the main technology behind bitcoin and it involves a public ledger that supports instant and anonymous payments. All participants in bitcoin’s currency network have access to the ledger. The technology skirts government regulation. According to sources, IBM’s proposed digital currency system is expected to work in a similar way as bitcoin, of course, with some of regulations.
The U.S. Federal Reserve is one of the central banks that IBM has been discussing its virtual currency concept with. The thought about digital support for major currencies comes when central banks have started showing interest in digital currency innovations. In a September 2014 report, the Bank of England cited blockchain as a major innovation with the potential to transform the financial system.
Concerns for IBM to address
However, some of the issues that International Business Machines Corp (NYSE:IBM) would have to deal with as it enters digital currency support are money-laundering and other criminal activities that have dogged bitcoin network.
IBM’s digital currency proposal is still at an early stage. However, the digital currency technology could allow linking to a user’s bank account, maybe through wallet software.
Digital support for currencies such as the dollar is not only expected to save the government money, but also make transactions fast, secure and convenient.