Exploring the Possibility of Bitcoin and Crypto Being Killed by Financial Institutions
Why Could Bitcoin Be Killed By Financial Institutions?
In a Forbes article, the cryptocurrency and blockchain writer, Billy Bambrough gave an explanation about why Bitcoin could be almost ready. He mentions that a report suggests that banks around the world and other financial services companies could adapt themselves to the new cryptocurrency and blockchain era, thus, making Bitcoin obsolete.
Back in 2008, bitcoin was created as a way of avoiding traditional financial institutions and intermediaries. And since that moment, it has been growing year after year.
Rebecca Harding, Chief Executive Of Coriolis Technologies, Said:
“Lack of political leadership in the immediate aftermath of the financial crisis globally has created a tide of populism which has led to economic nationalism and trade wars.”
This can clearly be seen in China and the United States with their dispute about tariffs and currency devaluations. Additionally, the United Kingdom leaving the European Union (EU) is also another symptom of this crisis. And indeed, Europe and other countries around the world are moving towards populism, nationalism and extreme ideologies.
For Harding, Bitcoin is a financial form of populism. She explains that Bitcoin is the natural response to a broken system. She then says that if the system is fixed, Bitcoin and other public blockchains, including cryptocurrencies, will cease to exist.
There are some banks and financial institutions that are using cryptocurrencies and blockchain technology to improve their services and products. They have embraced the technology. For example, XRP is being used as a cryptocurrency to transact funds among banks and other financial entities. It allows those companies to reduce costs and increase transparency and efficiency.
However, there are some banks that are sceptical about Bitcoin and blockchain technology. They need to invest in technology, research and development and stay ahead of the curve, not behind. If they remain updated, then, they would be able to compete with the new financial startups.
“There is a lot of money being poured into [blockchain and cryptocurrencies],”
“Banks are at risk of becoming nothing more than large financial companies, people in the industry tell me.”
At the same time, there are traditional technology companies that have shown their interest in disrupting the financial system. We can mention some examples such as Facebook in the United States, or Alibaba in China.
Although it’s true that these companies have a real interest in virtual currencies and blockchain technology, they do not trust the current regulatory environment. Countries around the world were not able to create comprehensive and flexible legal frameworks for these companies to flourish and grow. Countries such as Malta and Switzerland are ahead in terms of regulations, but most of the world is still trying to figure out how to better regulate the market.
Coriolis says that trade is currently used around the world coercively with the intention to achieve national or domestic objectives. Something that has been accepted very well in the United Kingdom and in the United States.
The report says that unless banks and other companies speak out about threats posed by increased bilateralism and economic nationalism, a miscalculation could produce unwanted results.
As per the report, Banks are challenged by the politicization of trading activities or the emergence of new technologies around the world.
“Technology, in particular, big data and predictive analytics, give banks the potential for managing these risks and increasing their relevance,”
Says The Report.
Bitcoin, cryptocurrencies and blockchain technology could be embraced by the evolving financial system. Although it is not easy and might not happen, there is still a chance for it to happen.
If banks and other financial entities embrace these technologies, Bitcoin and cryptocurrencies could become less appealing to individuals.