Prof. Jayanth R. Varma’s Financial Markets Blog

A blog on financial markets and their regulation

Bitcoin as a retail RTGS without a central bank

Richard Gendal Brown has a very valuable blog post about bank payment systems that ends with a brief discussion about Bitcoin. His conclusion is very interesting:

My take is that the Bitcoin network most closely resembles a Real-­Time Gross Settlement system. There is no netting, there are (clearly) no correspondent banking relationships and we have settlement, gross, with finality.

I agree with this characterization, but would only add that Bitcoin is an RTGS (Real­Time Gross Settlement) without a central bank. To computer scientists, the core of Bitcoin is an elegant solution to the Byzantine Generals problem. To finance people, perhaps, the core of Bitcoin is an RTGS that (a) is open to all (and not just the privileged banks) and (b) functions without a central bank.

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2 responses to “Bitcoin as a retail RTGS without a central bank

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