How Bitcoin User Transfers Or Deposits Money?
In addition to the previous article of Scopes Of Bitcoin Network Growth In Eyes Of Centralized Banks in which highlighted the reason to believe that the digital era for Bitcoin may be taking an aim at the central banks, this article explains further about the central bank mindset and how user transfers money.
Well, Bitcoin User-A publishes his/her intention, throughout the network, to transfer money to User-B. Double spending the act of using the same money in two different transactions. This can be prevented by validating the transactions by other users, called the “miners”, who are rewarded for this activity by granting them the ability to generate more Bitcoins.
Mining has turned into an extremely expensive and energy-intensive fight between industrial “Bitcoin Farmers”. These fights or competition that are unregulated do not always output to maximum efficiency.
One might ask, how would the above Bitcoin system function if it were to be owned by a central bank, with unhindered rights to generate money?
A solution to this was proposed in March by Sarah Meiklejohn and George Danezis of University College London. This solution was inspired by the research program on digital currencies, conducted by the Bank of England.
They suggested something called RSCoin. RSCoin technically allows the central bank to keep complete of the monetary supply. The only mine owned by the state is the first of its kind developed for the central banks in that system.
Alternatively, the transactions are subjected to verification by “mintettes”. Mintettes, dubbed by Danezis and Meiklejohn, are basically entities that are authorized by the central banks, and hence to serve as “notaries”. These mintettes gather all the completed transactions into blocks and is entered in the ledger. The central bank is responsible for keeping track of these mintettes’ and reward them accordingly.