The New York Timestechnology and finance reporter Nathaniel Popper’s new book “Digital Gold: Bitcoin and the inside story of the misfits and millionaires trying to reinvent money” has been praised as one of the best Bitcoin books to date. Popper tells the story of Bitcoin from its geeky, libertarian early days to the beginnings of the current phase marked by significant venture capital investments and growing adoption by the financial community.

Popper’s book contributes to the ongoing Bitcoin vs. blockchain debate. Once a bitcoin-like digital currency is adopted by banks and governments, will it still be recognizable as bitcoin, or rather become a sanitized blockchain controlled by central banks, with all the troublesome features of bitcoin removed?

“A company like Goldman Sachs or JPMorgan is hesitant to rely or work with a financial network in which the people keeping it alive are essentially anonymous,” says Popper in a Forbes interview. “Banks have to know who’s transacting and flag it if someone suspicious is involved in the transaction. But it’s quite easy in Bitcoin to have an identity tied to an address in a way that would make a bank feel comfortable.”

Popper released previously undisclosed information in a section of his book, re-published by American Banker magazine with the title “When Goldman Sachs Began Flirting with Bitcoin.”

Goldman Sachs is one of the most respected financial companies in the world, often considered as epitome of the best – and the worst – of today’s financial system. Therefore, Goldman Sachs’ take on bitcoin can be considered as representative of the financial industry as a whole.

Recently, after stating in a report that Bitcoin could shape the future of finance, Goldman Sachs participated as lead investor in a $50 million funding round for startup “Bitcoin bank” Circle in one of the highest profile investments in a Bitcoin company to date.

Financial operators are attracted by blockchain-based financial networks with no single point of failure, which could keep running even if one of the participating nodes stops working or is taken out. They are also attracted by the relative speed and low cost of blockchain transactions.

It currently takes the bank three or so days to settle stock trades, says Popper. “What if that could happen instantly and be recorded on a blockchain for everyone to see?”

But, according to Popper, Bitcoin remains a thorny issue for Goldman Sachs, JP Morgan and other top financial players. The problems are Bitcoin’s potential for anonymity, and the fact that the Bitcoin blockchain is “powered by thousands of unvetted computers around the world, all of which could stop supporting the blockchain at any moment.”

Popper reports that JPMorgan and other major banks envisaged a new blockchain that would be jointly run by the computers of the largest banks and serve as the backbone for a new, instant payment system without a single point of failure. The new blockchain, decentralized but closed, would offer the benefits of the current Bitcoin network without relying on end-users for its operations.

IBM has recently developed a similar concept for a non-Bitcoin, closed blockchain for central banks. Even governments are warming up to the idea, with rumors of “Fedcoin” in the United States and some kind of “Eurocoin” in Europe, especially in financially troubled economies such as Greece’s.

In a research paper titled “One Bank Research Agenda,” the Bank of England called for further research to devise a system that could use distributed ledger technology without compromising a central bank’s ability to control its currency.

It appears that financial institutions, central bank and governments are, indeed, flirting with the blockchain but determined to leave the open, pseudonymous and peer-to-peer (P2P) features of Bitcoin out. If so, Goldman Sachs’ investment in Circle could be seen as an intermediate, preparatory step to test the waters before implementing a non-Bitcoin blockchain.

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