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Blockchain could become mainstream earlier than expected as central banks are predicted to leverage the distributed ledger technology (DLT) for fiat currencies. The prediction was made by a high ranking official of the Federal Reserve Bank of Boston at this year’s Forbes’ annual 30 Under 30 Summit.
Speaking at the event, Vice President of Treasury and Financial Services at the Boston Federal Reserve Jim Cunha believes that it won’t take long for central banks to start issuing digital fiat currencies through the blockchain. Cunha cited Sweden’s central bank, Clearmatics Technology’s Utility Settlement Coin, and Singapore’s Project Ubin as some of the pioneers using blockchain to improve their systems and processes. This interest by monetary authorities, according to Cunha, will lead to a state-backed fiat currency that uses blockchain.
The forecast puts blockchain at the center of central banks’ monetary efforts as early as 2023. The technology thought to only power cryptocurrencies has not only found its way into businesses but also into monetary authorities around the globe.
But Cunha is worried. With 30 years of experience at the Federal Reserve, he believes that the biggest problem that the blockchain faces isn’t technological, but rather the individuals and organizations building and running these decentralized systems. And he is not wrong. While many developers in this ecosystem choose to remain anonymous for security reasons, others do so to escape from the grip of the law after scamming users and investors.
As Cunha puts it:
“We use private companies all the time, I don’t know if we’ll ever do that with cryptocurrency.”
Nevertheless, the veteran Federal Reserve official is researching into how best to leverage the blockchain for robust solutions. Cunha also detailed some of the blockchain experiments he is championing with a team of 200 members at Boston through Hyperledger Fabric and Ethereum blockchain, as well as how the Boston Federal Reserve is collaborating with startups to learn more about the technology.
Above the security concerns, however, blockchain has proven to be a useful technology for modern solutions, from humanitarian efforts by agencies such as the United Nations and peer to peer energy initiatives to global remittance solutions. Finding its way into central banks would mean blockchain’s roadmap into mainstream adoption would be shortened.