CitiCoin, FidelityCoin - what’s going on?

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30 July 2015
John Dwyer
For those of you that missed it, it seems that Fidelity may have been bitten by the Blockchain bug as a story arose that they have patented the term “FidelityCoin.” Now we have nothing else to go on and are only reacting to a story but if anyone wanted any further evidence that Blockchain and cryptocurrencies are attracting mainstream financial institution interest then here it is. The financial firms that have been publicly associated with Bitcoin and Blockchain technology include:
  • Citi-who have apparently built three Blockchains and have tested their own coin, “Citicoin”
  • BNP Paribas are, according to press reports, considering cryptocurrencies for their currency funds
  • SocGen who are seeking developers for Bitcoin, Blockchain and cryptocurrencies
  • UBS who announced a Blockchain technology research lab
  • Goldman Sachs who have invested in Bitcoin start-ups
  • Others including Santander and Standard Chartered
Taking the initial FidelityCoin at face value, let’s think about what this could mean. Are we really going to see lots of incumbent financial institutions issuing their own cryptocurrencies? Well, perhaps that’s a little premature. However, now we have technology that can move value extremely quickly and efficiently between financial institutions (incumbent and emerging) and individuals this could impact traditional deposit-taking institutions i.e. the banks. If Bitcoin type wallets in the future can be truly secure with multi-sig technology which can hold Bitcoins or Tethers (fiat-currency backed Bitcoins) then why not just plain old fiat currency in electronic form? In effect, buying a particular financial institution’s coin, let’s call it “BankCoin,” means that you have deposited some cash with that financial institution which could fundamentally challenge the position of the deposit-taking financial institutions as the number of challengers proliferates to buy-side institutions and new emerging players. Taking it one stage further, it may also bring into focus the difference between a deposit-taking institution and a custodian. The former takes ownership of an asset thus bringing risk to the depositing customer from a bank-run whereas the latter is more protected as the financial institution is merely holding custody of the asset, in this case cash. Blockchain technology could bring safety-deposit boxes to the digital age…

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