The United Kingdom’s Central Bank, the Bank of England, is working with researchers at University College London to design a Bitcoin clone of its own, according to a new report.

MIT Technology Review details how the Bank began researching the idea of issuing digital currency early last year, one that could make retail payments more efficient and the financial system as a whole more resilient.

“Software that can instantly move digital cash from place to place should be able to make many transactions, both large and small, faster and less costly,” the report notes.

RSCoin, like Bitcoin, utilizes the Blockchain to handle transactions, but unlike Bitcoin would be centrally controlled by the bank itself, which would retain an encryption key that could be used to control the supply of the digital currency available.

Processing all RScoin transactions would be done by “select third-parties,” presumably by large commercial banks, and would allow the RScoin system to handle a high amount of transactions per second.

Transfers

The primary goal of RSCoin would seem to be in facilitating rapid transfers between financial institutions as opposed to being a general form of currency in regular circulation, such as with Bitcoin, although ultimately there would be nothing stopping the Bank of English later deciding to expand the ways it could be used.

The bank is also said to be interested in how a system like RSCoin could help banks and other financial institutions move conventional assets around and how it might automate certain transactions such as futures contracts.

Using a Blockchain-based system such as RSCoin to transfer future contracts or even shares is far from a radical concept; the Australian Stock Exchange (ASX Ltd.) is already working with Digital Asset Holdings, Inc. on such a system, and the R3 Consortium is working with banks across the globe on ways to use the Blockchain in everything from intra-company transfers, through to international transfers of actual funds.

So far RSCoin has been tested on 30 servers inside Amazon’s cloud computing service with the researchers now in talks with the Bank on how to implement this system in their infrastructure.

If you’re interested in learning more about RSCoin further details can be found in the Centrally Banked Cryptocurrencies research paper by George Danezis and Sarah Meiklejohn, which was presented at the Network & Distributed System Security Symposium last month in San Diego.

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