Public blockchains can create ‘unprecedented efficiency’: 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.

While many other central banks and financial institutions haven’t decided whether they want to develop central bank digital currencies (CBDCs) or utilize 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.

It’s perhaps no surprise then that the ECB’s Director General for Market Infrastructure and Payments, Ulrich Bindseil, published a paper on February 18 recognizing the potential of public blockchains to provide markets with “unprecedented efficiency.”

Ulrich and his co-author, Columbia University professor and author Omid Malekan, argued that there’s no reason the digital euro couldn’t be minted on a public blockchain. Furthermore, they argued that permissioned blockchains are complex databases and that public alternatives are better by many metrics.

While the paper noted some drawbacks of public blockchains, such as hacks and the potential for illicit trade, it 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!

The pieces are slowly coming together

Just like in the early days of the Internet, the blockchain industry has seen the rise of multiple competing networks like BTC, Ethereum, Cardano, Hedera Hashgraph, BSV, and others. Furthermore, there are endless numbers of private blockchains entirely controlled by banks or institutions.

One unbounded, scalable public blockchain

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

The benefits of this are numerous, including 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 can’t handle NFT launches without buckling under the pressure, and its proposed solutions, involving all manner of levers, plugs, and pulleys, is a Frankenstein invention that has improved exactly nothing and has introduced plenty of new problems.

Where, then, should the world turn? Back to the original Bitcoin protocol, today, it exists 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 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 were not on his agenda; that all came later when misguided extremists pursued 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, the ECB’s Ulrich Bindseil is right: public blockchains are superior, and CBDCs could be minted on them. When it comes to comparing the various options out there, one stands head and shoulders above the rest: the BSV blockchain. 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.

Watch: It’s time for corporates to turn to public blockchain solutions