Bitcoiners champion how blockchain technology could undermine the financial system and effectively destroy banks. Bitcoiners mention how banks are going the way of the buffalo and blockchain inspired technology – or simply Bitcoin – will revolutionize the way the world does, basically, everything.
Bitcoin, they say, will allow individuals to become their own banks.
But, what if the opposite is happening?
Many people on the opposite side of the aisle believe that blockchain technology will cut overhead so much that the record profits big banks have made in recent years will look small. Blockchain technology could allow banks to slash the bottom line, undermining the need for tellers and many back office employees. Already, banks are looking to do away with the bank branch as the world turns towards cash cards and online banking.
Blockchain technology can also cut costs associated with anti-money laundering (AML) and know your customer (KYC) transactions, which could be integrated more than ever before with the government and in real time. AML and KYC measures have been a headache for banks this century.
Bitcoiners argued the Bitcoin system is going to undermine the power of the banks. What is likely going to happen instead is that blockchain-inspired systems will empower banks more than ever to maintain regulations and track of money.
It’s not only dedicated Bitcoiners, however, worried that Bitcoin could undermine the banking system, lending credence to the notion. Former Federal Reserve Bank Examiner said: “If adopted in its current raw form, bitcoin has the potential to undermine the longstanding bond between sovereign and its currency.”
BNP Paribas said blockchain technology could make existing institutions “redundant.”
However, the opposite notion is far more prevalent.
As HSBC has stated: “If we move towards an economy where all transactions become recorded in real-time on a Blockchain type of technology, it will not be too dissimilar to the current eco-systems that many e-commerce giants have around the globe.”
The added: “In the same way, a modernized monetary transmission system, based on real-time big data analysis through Block chain, could allow the government to balance the economy more efficiently and systematically.”
R3 has managed to organize every major western bank together on a project designed to imitate blockchain technology as it exists in Bitcoin. These firms are open-minded as to how this final form will take, even suggesting they could re-invent security altogether in pursuit of new banking systems.
Financial institutions are not going to surrender their industry. And consumers will appreciate easy-to-use more efficient systems of the future in banking.
Clients of bank accounts could, in the very near future, be using blockchain technology themselves, without even knowing it.
Featured image from Shutterstock.