The technology behind digital currency bitcoin could have far-reaching implications and the potential to reshape the financial industry, according to a new report by the Bank of England (BoE).
The reason for the BoE's excitement? Virtual currencies - most notably bitcoin - have at their heart a publicly distributed ledger system called the "block chain" that makes sure all transactions are verified in a transparent, decentralized and secure fashion without imposing hefty transaction fees. This system is a "genuine technological innovation", according to a new report by the U.K.'s central bank, which details the negative and positive aspects of cryptocurrencies.
"The key innovation of digital currencies is the 'distributed ledger' technology that allows a payment system to operate in an entirely decentralized way, with no intermediaries such as banks," the BoE's quarterly report, released on Thursday afternoon, said.
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The BoE went on to say that the ledger system is a fundamental change in how payment systems can be made to work, demonstrates that digital records can be held securely without any central authority and has the potential to develop further.