USC – the anti-Bitcoin

Bitcoin and blockchain – the hype surrounding the two terms has hit not only in the past waves, but also on Wednesday. On this day, the financial giant BNY Mellon, the German bank, Banco Santander, UBS, the broker Icap and the technology company Clear Automatics have announced to work together in the future on the development of the blockchain technology.

The information, to introduce the so-called Utility Settlement Coin (USC) in this framework, quickly resulted in messages such as: “The UBS works with other banks to new cyber-currency”, or “Complete the UBS Swiss francs from?” In reality is just the opposite is true. Finally, provides the concept that a USC must be deposited one on one with a conventional currency like francs, euros, dollars or pounds and that it can be converted to this. So unlike a Bitcoin has no “monetary life of its own”, but replicate existing monetary units. Basically is a utility Settlement Coin So not much more than a value-free, digital currency substrate, which is required for the processing of financial transactions by means of a block chain, for technological reasons.

The provider of this simple-sounding concept intend to kill two birds with one stone. Firstly, they want to take advantage of the block chain technology. This is defined as a system which acquires through its consistent and unchangeable history probative to regulate ownership. In practice remotely configured computers should together form an open accounting system that documents the conditions for transactions of digital values worldwide. This does not sound complicated to make the direct settlement of transactions between buyers and sellers of financial instruments in the future easier, faster, more transparent and, above all, cheaper than in the past. Secondly, the initiators of the concept want to keep the regulatory hurdles as low as possible by leaving the existing circulation of money does not even. Since each USC must be backed by existing assets, the monetary conditions do not change fundamentally – even if the units were to be used more and more. This aspect leads to the optimistic hope that in consultation with central banks and regulators that promoted system could reach the market in two years.

Additional and significant aspects of the safety and reliability of the technological project. In fact, Bitcoin has indeed technologically made in the past sensation, but not only in the positive sense. Critics rubbed on rigid monetary model, the erratic price development of the currency, the spreads between bid and offer, at low speed and transparency, and the concentration in the trade and in particular on the vulnerability of Bitcoin exchanges for fraud. Seen in the Utility Settlement Coin is an anti-Bitcoin. Since they are only for technical reasons, it is likely to go but soon forgotten.

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