This new "USC" (utility settlement coin) is for inter-bank transactions only, not for the general public.
It apparently is backed by a blockchain as a distributed ledger.
Details are a bit sparse across the web, but apparently it is intended as a way for fast money transfer between and within central banks and regular banks.
The coins act as a proxy for 'real' money issued by central banks.
Worrying that this blockchain isn't "open" or "democratic" like Bitcoin is just silly. It's like worrying about the fact the NYSE hasn't open sourced its internal code.
The rest of us would have to use intermediate parties that would handle everything for us.
You don't need to mine bitcoin to use it. It is still very cheap to use bitcoin still as an independent node. You can use those gateways to make your life a bit easier, but from cost perspective I think they are not needed.
Now you can still get into running a node and even doing mining however as time passes the barrier to entry increases exponentially and considerably faster than the capacity of individual hardware so you can't even really catch up.
While bandwidth and storage costs exponentially decrease.
Handling the entirety of VISA's volume with bitcoin transactions would require at least a 4Mbit/s connection (about double for peak times). That's not exactly out of reach of normal consumers.
In that scenario the blockchain would grow bigger by 40Gb each day, or 15Tb per year. If you want to store that all, with current hard drive prices that would be $40 per month for new hard drives. Of course if you're not interested in looking up other people's random transactions, most of the data can be pruned as soon as the coins are spent elsewhere, giving you barely any blockchain size increase.
And all of those resources get cheaper all the time.
Resource requirements aren't a fundamental problem for bitcoin. The block size that limits it to ~0.3% of VISA's volume, and the mining system that favours a near-monopoly for the person with the lowest operating costs are far bigger problems.
Visa alone processes between 2000 and 10000 transactions a second.
Bitcoin is architected to handle 7 transactions per second. From my understanding this limitation can not be overcome by adding more miners, it is by design.
Yes, mining it yourself is not feasible so you do need one to get ahold of bitcoin and to get fiat currency back from bitcoin, but you don't need (and maybe shouldn't use) one just for storing bitcoin, paying with bitcoin, receiving bitcoin. That's the whole damned point of bitcoin, but then people go and store it with mtgox anyway even though they're not about to exchange it, and are bummed out when mtgox loses their money. It sucks, but it's funny that half the point of bitcoin is making this situation impossible, if you bother to do it right
(Of course, if you trust a third party more than you trust your own ability to not lose/forget your private key, then I guess it makes sense, but you're trading a lot off in exchange for that)
The blockchain is a bit large at 80GB but you don't need to download the whole blockchain to run a wallet and make transactions there are "light wallets" that will do this, and currently in testing is an even more efficient method of doing this called segregated witness.
Banks are really interested in using blockchain like technologies for settlement and clearinghouse related tasks, it would allow them to have near real time settlements without much effort and could both reduce their liability and costs. Both concurrent and correspondent banking has pretty big liabilities banks have to keep standing accounts with funds to facilitate, these funds are pretty expensive for the banks to keep since they both do not earn any interest and they are not fractional.
Banks are also tied to fairly expensive transfer schemes (ACH/FSP) and service providers like SWIFT because a lot of the fast transfer schemes have limited membership (there are only 10 clearing members in the FSP for example) most banks end up paying pretty large transfer fees for agency banks that perform the transactions for them.
Having the ability to set up blockchains that could easily be extended which would provide both the messaging/transfer functionality and the ledger that can be used for account settlement and consolidation between banks, as well as being extensible enough to allow multiple banks to join in either to the main blockchain or to sub-chain makes all the sense for them.
Banks however would not and for the most could not use "digital currencies" for their day to day dealings, the only currency they are allowed to "create" is their respective national currency.
Which jurisdictions are you talking about here?
I take free banking like historically practiced in Canada, Scotland or Australia as the model here---they dealt very will with fractional reserves. I don't see how introduction of other currencies would be a problem? Please explain.
[0] http://laws-lois.justice.gc.ca/eng/acts/C-52/page-1.html
http://www.alt-m.org/2015/08/08/thats-right-famously-sound-f...
I am not quite sure where it forbids alternative currencies, as long as you don't call them money?