On December 12, Prime Minister Benjamin Netanyahu openly commented on the future of banking, seen through a youtube video. He believes that blockchain technology will replace traditional banks as a result of bitcoin's growth this year.
The video is one of the first instances where a world leader has openly addressed and commented on cryptocurrencies and the bitcoin. With governments and Central Banks around the world concerned over the unstable growth of digital currencies, Netanyahu, a prominent world leader, expresses his honest opinions on the future of banking.
The Prime Minister states in Hebrew:
Is the fate of banks that they will eventually disappear? Yes. The answer is Yes. Does it need to happen tomorrow? And do we need to do it through Bitcoin? That’s a question mark.
Israel, like many other countries, is currently under a digital currency craze. There have been local media reports of daily price changes and overnight millionaires. There are reports of people queuing outside Bitcoin ATMs in Tel Aviv.
Despite this frenzy, Prime Minister Benjamin Netanyahu, an MIT graduate and previously, an economic consultant for the Boston Consulting Group, understands the value in the blockchain, the underlying technology of cryptocurrency.
When Netanyahu spoke about the role of banks, he saw that their purpose, to ensure valid and safe transactions between two parties, could be disrupted by the blockchain.
In the 70 second video, he states that a bank is more of a middleman and sees blockchain as a decentralized alternative to the current centralized banking system. ‘The truth behind what I just said is what’s propelling Bitcoin upwards.’ The blockchain can perform all the functions of a bank without the need for an inefficient central institution who takes a transaction cut every time.
The Cryptocurrency Industry responds positively to Netanyahu’s comments. The Street demonstrates that Rami Shechter, CEO and founder of Vanywhere, a blockchain peer to peer sharing platform ‘agrees with Netanyahu’s vision regarding the disappearance of banks in the future, possibly due to cryptocurrency. We believe that the biggest news about cryptocurrency in relation to banks is the reduction of fees. People have had enough with middlemen and third parties taking cuts of every transaction.’
Adam Perlow, founder, and CEO of Zen Protocol also agrees with Netanyahu. He states that ‘as the Israeli prime minister said, banks act as escrow agents which reduce counterparty risk. Bitcoin technology provides an alternative solution to counterparty risk. Bitcoin technology provides an alternative solution to counterparty risk by providing a new, more efficient sort of escrow mechanism - smart contracts. As in any industry, in the long term, it is hard to imagine any plausible outcome where the more effective solution does not render the previous solution obsolete."
Although Netanyahu sees the importance of bitcoin and blockchain technology, he is doubtful of Bitcoin’s longevity into the future as:
[T]here’s nothing like this, that will continue rising at this rate. It can’t happen.’
Featured image from Shutterstock.