Britcoin, not to be confused with Bitcoin, is the name given by the British Chancellor of the Exchequer Rishi Sunak to the hypothetical digital currency of the British central bank.
In fact, it is also the name of an old cryptocurrency project that has been abandoned for years.
The British Pound
The British central bank, Bank of England (BoE), is the one that issues and manages the British Pound (GBP), which is one of the oldest fiat currencies still in circulation, as it has been around since 1489.
Since last year, the bank has been studying the feasibility of a natively digital version of the Pound. That would be a so-called CBDC or Central Bank Digital Currency, but from a strictly financial standpoint, it would be the exact same thing as the current Pound, only it would be based solely on a public digital ledger.
Therefore, it would not be a cryptocurrency but only a natively digital version of the British fiat currency already widely traded on the markets, especially in digital format.
The progress of work on Britcoin
BoE is still considering whether to launch its CBDC, or “Britcoin,” as Sunak called it, and has not yet decided whether or not to proceed with its creation and distribution in the market.
The fact is that the bank is worried that the increasing popularity of stablecoins, which are cryptocurrency tokens collateralized at par in fiat currency, will end up creating problems such as a possible wave of money withdrawals from banks or putting financial stability at risk.
Truth be told, there are very few stablecoins pegged to the Pound on the market nowadays, and they have extremely limited usage, but those pegged to the US dollar are still widely used around the world.
However, a CBDC could also have other advantages over using a classic fiat currency that is not natively digital; therefore, Britcoin could introduce some important innovations to the UK financial landscape.
