The banks are not going to be left out in the cold.

We knew this would happen. The banks were going to put up a fight, inserting themselves wherever possible to maintain control of the global monetary system. This is pitting it against cryptocurrency, something that offers the ability to transact without financial intermediaries.

Naturally, this is a threat to the established institutions. For this reason, they are doing whatever they can to incorporate themselves into the process.

We are starting to see them embrace blockchain as a mechanism for their operations. This does not mean public blockchains but, rather, the technology itself.

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British Banks Banding Together

We got a press release announcing the new UK Regulated Liability Network (RLN). This is going to be an innovation platform experimenting with different forms of money utilizing blockchain.

There are well known firms involved. Here is the list:

Barclays, Citi, HSBC, Lloyds Banking Group, Mastercard, NatWest, Nationwide, Santander, Standard Chartered, Virgin Money and Visa

The idea is to offer payments, transact, and settle liabilities across a digital networks.

This does include commercial bank deposits. We also see the idea of integrating with the digital pound if that is created.

Mirroring The Existing System

We are seeing nothing more than a recreation of the existing system. It is interesting to watch then try to maneuver technology to fit their needs when it actually goes beyond them.

To start, with the introduction of a bank digital currency, there is no need for two ledgers. All payments and transactions could occur on the "central bank" ledger. If the digital pound is recognized as legal tender, which it would be, then why do you need the commercial bank ledger? The answer is clear.

Of course, the Bank of England is going to protect the commercial banks. If it doesn't they collapse and go out of business. Without deposits, banks cannot do anything. Their product is gone.

What we are seeing here is a replication of the two-tiered banking system we see today. At present, money is moved between commercial banks, altering the ledger of each. Then, settlements are done between then at the central bank level, which maintains a ledger of all member banks.

It appears this experiment is looking to build a digital ledger, one which would end up on top of a CBDC ledger, just incorporating more entities. Instead of simply having the ledgers of banks individually, the transactions would include all parties, including payment entities such as Visa and Mastercard.

By the way, the two entities are no longer needed in a world of ledgers and crypto.

Integration of Crypto?

Could this system include cryptocurrency?

If that was the desire of the participants, it could be integrated. Of course, this brings up the question as to why? From the banking perspective, it is obvious. The banks are looking to stay relevant although I am sure they look at it differently.

What is important is what benefit does the user get? Why is there a need for something like this? At this point, since infrastructure is not built, it becomes clear. However, if Web 3.0 starts to evolve as many envision, the components will be in place to conduct all kinds of financial transactions without the need of the banks.

According to the press release, here is what they are experimenting with:

The UK RLN experimentation phase will focus on the following use cases:

• Payment-upon-delivery for a physical product, aimed at reducing fraud in online marketplaces.
• The process of buying a home, improving customer transparency, and mitigating conveyancing fraud.
• A digital bond settlement, to connect digital customer money to digital assets.

Most of these are topics we discussed repeatedly in articles. Why is this network required for buying a home? To provide that service we simply need a NFT, digital escrow account, and a lending platform. Certainly there are regulatory matters since governments are involved in the record keeping. Nevertheless, over time, that is likely going to end up on public networks.

Competition

To their credit, the banks are use to competing. While they do own a monopoly, they do understand what it takes to keep pushing forward. They would not have survived this long if they did not.

However, what cryptocurrency and blockchain is doing is to create a new form of competition. This no longer is about finance or the institutions involved. Instead, we are dealing with the open versus closed debate.

The banking industry is under attack from every Web 3.0 developer. Whatever is being created that incorporates or is tied to payments, transactions, or tokenization is a potential threat to the banks. In this regard, Bitcoin, Ethereum, Hive, TRON, and Cardano are all on the same side. While there could be disputes among them, we are seeing the tentacles extend into many different areas.

Also, the banks are trying to operate in the financial arena. Here is another area of downfall in my opinion. There is no financial, social media, or commerce.

Instead, what we are simply dealing with are networks. This means data, nodes, compute, and applications. monetary systems have nothing to do with money. They are digital networks penetrating every aspect of the online world.

This is something Elon Musk is undertaking. By looking to offer payments and other financial services on X, he is utilizing this concept. Other non-financial entities are going to follow along.

A ledger on a digital network is a monetary system. The form of money riding on top can take many different forms. That is really secondary to the system itself.

Hence. the British banks are looking at something that is likely permissioned. To me, this is a rather limited network. From this perspective, it cannot stand up against something that is global, permissionless, and being built upon by many around the world.

This is why Web 3.0 is so important. It is also crucial to realize that cryptocurrency is just a small part of it. The banks are trying to fight crypto when the battle is at a larger level.

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