What Is Britcoin?
The digital pound is an initiative for a new type of money issued by the Bank of England used in-store or online to make purchases. Nicknamed “Britcoin” or “digital sterling,” the digital pound would be issued by the Bank of England and backed by the government and would not be a privately issued cryptocurrency.
Key Takeaways
- Central banks have been researching central bank digital currency (CBDC) as an alternative to cryptocurrencies.
- The digital pound, or “Britcoin,” is an initiative for a new type of money issued by the Bank of England.
- The term “Britcoin” once referred to a cryptocurrency launched and based in the United Kingdom in 2011 that was defunct by 2019.
Britcoin and CBDC
Central banks have been researching central bank digital currency (CBDC) as an alternative to cryptocurrencies. The Bank of England seeks to establish the digital pound to improve payment options. The digital pound would enable private companies to innovate, make payments more efficient, and provide consumers with more choices.
As consumers move away from cash and toward digital payments, new forms of money emerge, and some pose risks to financial stability. The digital pound would be an electronic version of the banknotes issued by the Bank of England.
A CBDC would be sovereign money, without fees, in digital form. A credit or debit card is bank money and is one step removed from the issuing authority. Bank money is often the place where fees are levied.
When using Britcoin, the Bank of England and the government would not collect personal data and see how consumers spend money. However, users access the digital pound through a virtual wallet that contains personal data.
Cryptocurrency in the U.K.
The rise of cryptocurrencies grew following the 2008 financial crisis. Many investors sought alternatives to traditional fiat currency, money issued by a nation’s government. Bitcoin was one of the first decentralized cryptocurrencies. Transactions are generally verified and recorded through a blockchain, a publicly-accessible ledger that records cryptocurrency transactions.
The term “Britcoin” once referred to a cryptocurrency launched and based in the United Kingdom in 2011. Like other cryptocurrencies, Britcoins allowed traders to execute transactions safely and privately without using a bank account. The cryptocurrency traded on the now-defunct Britcoin Exchange and provided individuals with an alternative to the British pound (GBP). Britcoin was delisted from most exchanges in 2019.
What Makes the Britcoin or Digital Pound Different From Cryptocurrency?
The digital pound would not be a crypto asset which can be very volatile and not hold steady value. The digital pound would be issued and backed by the Bank of England, and a £10 digital pound would be the same as a £10 banknote.
Can Users Save Digital Pounds or Britcoin to Earn Interest?
Individuals would not earn any interest on saved digital pounds, just like users wouldn’t earn any interest on physical cash. A digital pound is for day-to-day spending and not for savings.
What Countries Have Implemented a CBDC?
Indonesia has a digital rupiah prototype, Ghana has an e-cedi pilot program, and Sweden has been working with Accenture on an e-krona. Eleven countries, including Jamaica and The Bahamas, have implemented central bank digital currencies.
The Bottom Line
A central bank digital currency (CBDC) is an alternative to cryptocurrencies. The digital pound, or “Britcoin,” is an initiative for a new type of money issued and backed by the Bank of England. The digital pound would be denominated in sterling, and its value would be stable, just like banknotes. £10 in digital pounds would equal a £10 banknote.
