Jace Dela Cruz, Tech Times 06 February 2023, 09:02 pm

Despite the crypto market's tumultuous run in 2022, some are still finding heavy merits in the digital currency's future. One of those could be the UK, which hopes to launch its own "Britcoin" very soon.

UK officials said that businesses and consumers in the country might need a digital equivalent of the pound. Hence, they are now seeking public feedback on launching a central bank digital currency, according to a report by AP on Monday, Feb. 6.

The Committal Service For Her Majesty Queen Elizabeth II

(Photo : Alex Pantling/Getty Images)
WINDSOR, ENGLAND - SEPTEMBER 19: A mourner waves a Union flag during the Committal Service for Queen Elizabeth II at Windsor Castle on September 19, 2022 in Windsor, England.

Lagging Behind

AP notes that the UK has the second largest financial center in the world, lagging behind former colonies such as Jamaica and the Bahamas in creating its digital currency.

According to PwC, around 80% of the central banks in the world are either planning or have already launched their digital currencies.

The Treasury and Bank of England raised the plan to introduce a digital currency to the country nearly two years ago. The request for public feedback may finally make this plan a possibility.

Prime Minister Rishi Sunak recommended calling the venture "Britcoin" when he was still the head of the Treasury. However, the Bank of England noted that this might be confused with the popular crypto Bitcoin.

The Bank of England claims that the prospective currency will be reliable and keep its value over time compared to other cryptos that can lose their value due to market influences.

This was evident last year when the market entered a "crypto winter." It saw bankruptcies from major exchanges such as FTX and several digital currencies losing a large chunk of their value.

According to the bank, the planned digital money would be worth 10 pounds and equivalent to a 10-pound note.

Growing Crypto World

Those who support central bank digital currencies argue that crypto exchanges broaden access to the financial system and could significantly reduce the cost of digital transactions.

This reason prompted countries such as the Bahamas to introduce their digital currency in 2020 when crypto was at its height. Jamaica, Nigeria, China, and other countries have since followed suit.

According to AP, the European Union and the US are also looking into the prospect of launching their digital currencies. But despite the acceptance of many countries to the growing crypto world, it still does not diminish the risks and vulnerabilities that digital currencies face.

In the past, exchanges have been vulnerable to cyberattacks, and some lose their value over time due to unstable market fluctuations. Former Bank of England Gov. Mervyn King, currently a member of the House of Lords, argued that the proposed digital pound poses risks but no clear benefits.

He noted that digital currencies work in countries with effective banking systems but not so in Britain. He urges the government to be selective and not be swayed by misplaced enthusiasm for crypto.