England's central bank has announced plans to launch its own Bitcoin-like cryptocurrency, which will be named RSCoin and will function on the same blockchain ledger technology that powers Bitcoin.

With more and more news articles about the financial sector and government institutions taking a close look at how blockchain tech could be used for various types of record keeping and data storage operations, it should not be a surprise that somebody has finally taken the first step.

The Bank of England has shown an interest, alongside other banks, in Bitcoin technology for quite some time now. While other banks decided to hire R3 to carry out research work regarding blockchain technology, the Bank of England thought it would be a better idea to ask local researchers from University College London.

RSCoin wants to be England's official Bitcoin variant

Two scientists got on the job, and after a few months investigating cryptocurrencies and blockchain tech, the two came up with their own version that's specifically adapted to be managed by a central authority.

This concept is exactly the opposite of what Bitcoin stands for, where there's no ruling party overseeing the blockchain.

In Bank of England's RSCoin, the ledger will be under the bank's control, which would also be in the possession of a special encryption key. This key would allow the bank to add or subtract cryptocurrency from the ledger, as a way to control the blockchain's total size and to follow national and international financial regulations put in place after the most recent financial crisis from 2008.

This is impossible in Bitcoin's scheme, where at no time can there be more than 21 million Bitcoin while also nobody can ever alter the ledger after a transaction has been recorded, in any way or form.

RSCoin wants to bring order to the wild world of cryptocurrencies

The Bank of England's RSCoin is also specifically adapted to the way the banking system is shaped today, with special roles for banks that are allowed to process RSCoin transactions. Banks or other third-parties, like Bitcoin exchange services, could buy RSCoin and then serve as intermediaries between users and the Bank of England's ledger.

The central bank will remain in the background, overseeing transactions and intervening with its special encryption key to adjust the total sum of cryptocurrency or investigate abuse, just like in today's intensely regulated financial sector.

While many people will probably shun RSCoin as a state-operated shill, most will have to understand that states cannot allow a wild and uncontrollable currency to operate inside their borders, especially a cryptocurrency like Bitcoin that's known for abuse and cybercrime.

As it stands now, the two researchers tested RSCoin on 30 servers inside Amazon's cloud computing service. The researchers are now in talks with the bank of England on how to implement this system in their infrastructure.

More details about RSCoin can be found in the Centrally Banked Cryptocurrencies research paper by George Danezis and Sarah Meiklejohn, which was presented at the Network & Distributed System Security Symposium that took place last month in San Diego.