His statement, which was focused on how Bitcoin technology could bring genuine benefits to US central bank’s real-time settlement system, suddenly found Ripple as a reference to the true potential of Bitcoin’s public ledger system. According to Andolfatto, the Federal System could utilize a distributed ledger system to keep all the books simultaneously in their member banks. So in case of a system breakdown, the records could be recovered from the ledger.
“You could actually see which bank is sending money to which bank on this ‘Fedcoin blockchain,’ so if the Fed was to make an emergency loan to one of these entities you’d be able to observe who is the recipient of the loan and how much,” stated Andolfatto by drawing an imaginative scenario to elaborate his point.
He couldn’t be wrong as Ripple does exactly the same thing which he currently visions for Federal Banking Systems. Ripple software offers its users a home-grown wallet to trade Bitcoins for its private currency XRP, as well as fiats like US Dollar and Euro, in a distributed order book. It overall makes the process of withdrawing and depositing money distributable, as funds could be used to buy/sell Bitcoins from any of the listed order books, not just one.
“This [Andolfatto’s reference] seems to confirm Ripple is a winner in the inter-banking gateway business. Good for Ripple Labs (and XRP price),” said a Ripple enthusiast.
Andolfatto meanwhile also indicated that Fed economists are not thinking about implementing such a technology for now, citing their prior engagements as the biggest reason. “The thing to keep in mind is that there’s a lot on the minds of fed economists these days,” he added.
Do share your views on Fed official’s views in the comment section below.
Images from Ripple and Wikipedia.