We all know that virtual currency resides on the blockchain. But what about regular currency? It may be just a matter of time before blockchain money is a reality. Pragmatism and (ironically) central bankers may propel it.

I recently participated in the fintech conference for 100 global central bankers co-hosted by the Federal Reserve, World Bank and the International Monetary Fund. The conference included sessions about blockchains. Fed Chair Janet Yellen opened her welcoming remarks by discussing cybersecurity, which is top of mind in light of the recent Swift-related hacks. She also encouraged central bankers to learn about financial innovations such as bitcoin and blockchains.

The apparent interest of central bankers in blockchains could be an enormous benefit. And when the first major country issues fiat currency on a blockchain, that nation will gain a substantial competitive advantage. An obvious strength is cybersecurity, especially in light of the Swift attacks.

Blockchains use decentralized IT architecture, which is harder to hack than centralized, single-point-of-failure systems. And the bitcoin blockchain is robust IT architecture. Although it has lived fully exposed in the warzone of Internet security, and has a $9 billion capitalization sure to tempt hackers, it has survived seven years without a single successful attack on the core protocol.

A central bank that issues money on a blockchain will find that its domestic financial system suddenly becomes transnational. Capital will flow in. It will become the key hub of global payments. The pragmatic benefits would be immediate. In contrast to the delays, cost and opacity that multinational companies face today when moving money globally, they would rejoice over a truly global payments platform. The voices of these companies matter in currency markets because, through their day-to-day activities, their payments underlie foreign exchange volumes.

The world has more than 750 payment systems. They ensnare big-company treasurers in a labyrinth of hundreds of bank accounts around the world, trapping cash to cover delays as payments wind their way through the world's antiquated, slumbering, sequential, batch-processed payments systems. For treasurers, this ties up expensive working capital that could be invested elsewhere. Global payments are a black box. Things go wrong, surprisingly often. Companies want this fixed.

Central banks should embrace blockchain to fight their own irrelevance. "Central banks, just like everyone else, can't afford to be Uber'd," a top Bank of England official, Andrew Hauser, told the SWIFT Business Forum in London in April. What could possibly "Uber" central banks? A supranational platform created by a big central bank, that is first on the blockchain bandwagon, could do it by leapfrogging others to dominate global trade payments, settling in real time and without counterparty risk.

But central banks face more than just threats from each other. A de-nationalized system could also "Uber" monetary systems around the world. Denationalized money – such as bitcoin, ether or XRP – is tiny today but it is steadily gaining momentum in far-flung corners of the world. If central banks don't up their game, I believe corporations within 10 to 20 years will gravitate toward such superior architecture, which is faster, simpler and more transparent while containing zero counterparty risk.

Among the central banks already considering issuing fiat currencies on a blockchain are China, the United Kingdom, the Netherlands and Barbados. Others may be exploring the idea more quietly. Whether the Fed is interested was not discussed at the recent conference. But I believe the Fed has motivations to want to adopt a blockchain for the U.S. dollar. The dollar reigns supreme as the most important currency of global trade – both directly and as the intermediary for cross-currency pairs. But it's not truly global money.

A blockchain-dollar could, however, become truly global money. A blockchain-dollar would make it easier for the Fed to keep dollar money-market rates consistent around the world, which is harder as offshore dollar-denominated debt has proliferated. A blockchain could untangle the spaghetti structure of central bank swap lines, which would improve crisis response capabilities. Domestically, a blockchain-dollar could accomplish the goals of the Fed's Faster Payments Task Force in one fell swoop.

Were a blockchain-dollar to exist, regional and community banks in the U.S. could settle directly with the Fed. Or companies could use the blockchain-dollar themselves, just as some companies use Swift directly today. Or individuals could use blockchain-dollars. Bank of England official Ben Broadbent has broached that idea, imagining a possibility in which "everyone – including individuals – would be able to hold such balances" at a central bank.

In a sense, money issued on a blockchain is already happening – on the island nation of Barbardos. In emerging markets, restricted access to the global financial system through correspondent banks because of de-risking is boosting the use of bitcoin. Some multinational companies are quietly using bitcoin for payments in certain peripheral countries. But the Central Bank of Barbados decided to take matters into its own hands.

Its governor, DeLisle Worrell, detailed the extent of de-banking in the country to the Financial Stability Board in Tokyo and warned that "countries and individuals who no longer have access to the services of international banks, either directly or through the correspondent relationship of local banks, will have to conduct their financial and foreign exchange transactions outside the international system of licensed institutions."

So the Barbados central bank approved issuance of digital representations of the Barbadian dollar, each equaling a dollar issued by the Central Bank of Barbados, using the bitcoin blockchain. The approved platform, operated by the tech startup Bitt, allows users to transact with each other while maintaining the money in trusted bank accounts, and without exposure to bitcoin's price fluctuations.

The embrace of blockchain by a larger nation may not be that far behind.

Bank of England Gov. Mark Carney will very soon give his annual "Mansion House" speech in which he is expected to discuss blockchains. Will the BOE beat the Fed to issue money on a blockchain? Stay tuned.

Caitlin Long worked on Wall Street for 22 years until this past April, and was most recently a managing director in global capital markets at Morgan Stanley. She has been active in bitcoin since 2012 and blockchains since 2014. Her website is www.caitlin-long.com.