Bank of England Unveils RSCoin: The Central Bank Digital Currency That Could Rival Bitcoin

The cryptocurrency landscape stood at a crossroads on March 13, 2016, as the Bank of England made headlines with a bold declaration: central banks could build their own digital currencies and, according to some observers, beat Bitcoin at its own game. A front-page Telegraph story headlined “Central banks beat Bitcoin at own game with rival supercurrency” sent ripples through the crypto community and mainstream financial world alike, highlighting a growing tension between decentralized digital money and government-controlled alternatives.

TL;DR

• The Bank of England partnered with University College London researchers to develop RSCoin, a centrally controlled digital currency
• RSCoin claims to process over 2,000 transactions per second, far exceeding Bitcoin’s approximate 7 transactions per second
• Deputy Governor Ben Broadbent said a digital currency could strengthen the financial system and make retail payments more efficient
• Critics including Andreas Antonopoulos argued RSCoin and Bitcoin serve completely different purposes and audiences
• The announcement came as Bitcoin traded at approximately $414 with a market capitalization of $6.3 billion

The Birth of RSCoin

Researchers Sarah Meiklejohn and George Danezis at University College London designed RSCoin at the invitation of the Bank of England, which had begun researching digital currency issuance in early 2015. The system leverages cryptography to create digital cash resistant to counterfeiting, much like Bitcoin, but with a fundamentally different architecture. While Bitcoin’s blockchain is maintained by a decentralized network of miners worldwide, RSCoin places its ledger squarely in the hands of a central bank.

The central bank retains a special encryption key that allows it to control the money supply, enabling monetary policy actions such as quantitative easing. A select group of third-party organizations — most likely large commercial banks — would be chosen by the central bank to process new transactions and submit them for inclusion in the centralized ledger. This design allows RSCoin to achieve transaction throughput that Bitcoin could only dream of at the time: over 2,000 transactions per second with most transactions clearing in under one second.

For context, Bitcoin’s network was processing roughly seven transactions per second in early 2016, limited by its 1 megabyte block size and the computational requirements of its proof-of-work consensus mechanism. Credit card networks like Visa, by comparison, handle approximately 7,000 transactions per second. RSCoin positioned itself as a potential bridge between the innovation of blockchain technology and the scalability demands of modern finance.

Ben Broadbent’s Vision for Digital Currency

Bank of England Deputy Governor Ben Broadbent addressed the London School of Economics in early March 2016, outlining how a centrally issued digital currency could transform the financial system. He argued that digital cash could make retail payments faster, cheaper, and more efficient while strengthening the overall resilience of the financial architecture. Broadbent acknowledged that such a system would represent a fundamental shift in how central banks interact with the public, moving from the current model where central bank money is only accessible to commercial banks.

However, Broadbent also noted potential risks. In comments reported by The Guardian, he cautioned that a widely adopted digital currency could impact bank lending patterns and potentially threaten financial stability if not carefully managed. The deputy governor’s nuanced stance reflected the Bank of England’s careful approach: enthusiastic about the technology but acutely aware of the systemic implications.

The Crypto Community Pushes Back

Not everyone was convinced that RSCoin posed any threat to Bitcoin. Andreas M. Antonopoulos, the prominent Bitcoin advocate and author of Mastering Bitcoin, dismissed the comparison entirely. “I find it to be a hyperbolic claim that RSCoin will replace or void Bitcoin,” he told Bitcoin Magazine. “First of all, the new currency domain is not a winner-takes-all domain and has no monopoly status like national currencies do.”

Antonopoulos drew a sharp distinction between the two systems: “Bitcoin offers censorship resistance, open access, borderless commerce, permissionless innovation, network neutrality and strong immutability. RSCoin has none of those features, replacing the network-centric trustless and decentralized model with a centralized authority. Anyone who wants centralized authority has no interest in Bitcoin.”

UCLA finance professor Bhagwan Chowdhry offered a more measured perspective, arguing that RSCoin could actually benefit the broader financial system by making digital payments accessible to a much larger population. “The benefits of digital currency are immense,” Chowdhry said, noting that most consumers would adopt a central bank digital currency because they would “perceive it to be safe and familiar.”

The Broader Regulatory Context

RSCoin’s emergence in March 2016 did not happen in isolation. Just days earlier, on March 4, the Japanese Cabinet approved an amendment bill to the Payment Services Act that would bring cryptocurrency exchanges under the supervision of the Financial Services Agency for the first time. Meanwhile, the Bank of Canada was preparing to launch Project Jasper, a collaborative experiment with Payments Canada and the R3 banking consortium to test distributed ledger technology for wholesale interbank settlement. The R3 consortium itself had recently completed trials with 40 major banks testing five different blockchain platforms for commercial paper trading.

These parallel developments underscored a growing consensus among global policymakers: blockchain technology warranted serious attention, and the regulatory frameworks governing digital currencies needed urgent updating. Whether through centralized alternatives like RSCoin or through new rules for existing cryptocurrencies like Bitcoin, governments around the world were racing to establish their positions in the emerging digital currency landscape.

Technical Testing and Next Steps

As of March 2016, RSCoin had been tested using 30 computers running on Amazon’s cloud computing platform. Meiklejohn confirmed she was in discussions with the Bank of England about expanding the research to explore practical implementation. Both the researchers and the central bank expressed interest in how RSCoin could help financial institutions move conventional assets more efficiently and automate complex transactions such as futures contracts.

The RSCoin experiment represented one of the earliest serious explorations of what would eventually become known as Central Bank Digital Currencies, or CBDCs. While it would take years for the concept to mature and gain widespread adoption among central banks globally, the March 2016 discussions between the Bank of England and UCL researchers planted seeds that would reshape the conversation around money, technology, and state power for years to come.

Why This Matters

The Bank of England’s RSCoin project in March 2016 was a watershed moment in the history of digital currencies. It marked the first time a major central bank seriously explored creating its own blockchain-based digital currency, setting the stage for the global CBDC race that would unfold over the following decade. While RSCoin itself was never deployed as an actual currency, the research catalyzed a fundamental shift in how central banks worldwide think about money, technology, and their role in an increasingly digital economy. Bitcoin traded at $414 that week, but the real story was the beginning of a confrontation between decentralized and centralized digital money that continues to define the cryptocurrency landscape today.

Disclaimer: This article is a historical retrospective based on publicly available information from March 2016. Price data is sourced from CoinMarketCap historical snapshots. Past performance is not indicative of future results.