Transferable Bank Accounts

Here's a (possibly) daft idea. What if you could pay for goods using a transferable bank account?

Say you want to pay a friend some money. But you're not physically close enough to hand over cash.

You create a new bank account with a unique username and password. As quickly and easily as getting a new email address. Couple of clicks and it is done.

You move money from your main account into the new account. This happens instantly and is free.

A property of these accounts is that anyone with the username can see the value of the account. And, possibly, other metadata like when it was created, what transfers have been made, etc.

You tell the payee the username - and they can see there is credit in the account.

You tell the payee the password as payment.

Payee either changes the password to claim the account, or transfers the funds somewhere else.

Does this seem like a sensible idea? Let's ignore the Know-Your-Customer (KYC) issues, and the problems with secure transfer of passwords. It is convoluted, yes, but doesn't require transferring via banks. The money stays where it is, only the ownership of the account moves.

This is (sort of) what you can do with Bitcoin and other cryptocurrencies. Most crypto-fans will tell you that their payments are Peer-to-Peer (P2P). This isn't true. You can't transfer money from one user to another without recording and verifying that transaction with a 3rd party - the Blockchain. But you can create a new wallet. Transfer money to that. And then give the keys to someone else.

If I hand over a five-pound note to a friend, no central authority tracks that. It is truly P2P. My friend can transfer that note to someone else, and the currency will circulate. At some point, it might be checked by a central bank for authentication. But it is P2P up until that point.

Digital Money needs to work offline. Sure, the Bitcoin network has amazing uptime - but not every location on Earth has connectivity (or even electricity). Needing to access the network is a barrier to payments.

The inescapable fact is that the 'chain is a 3rd party to any transactions. That means it is inherently not suitable for P2P transactions.