If you were a large bank or another type of large financial interest, and you had finances say, in Greece, wouldn’t you potentially be looking for a good way to get them out quickly? Why wouldn’t you consider Bitcoin?
With Bitcoin, you could buy a large portion of them, and then transfer the money for a fraction of the cost, and then cash it back out into a fiat currency wherever you’ve sent it. For a bank, this would save a lot of time and money usually wasted on bank fees. For anyone else, it would represent a cheaper way of getting funds out of a dangerous environment.
Is there any reason banks shouldn’t consider using Bitcoin for large, international transfers? After all, the currency has been holding relatively stable in both directions, in many markets, for quite some time. It would be quite possible to expect the value to remain relatively stable for the duration of a transfer, after which the banks could push the bitcoins back out into the Bitcoin economy, and gather back their fiat funds. There’s no reason such transfers couldn’t be done and, more importantly, there’s no reason the banks couldn’t benefit from this cost savings.
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In some cases, banks could even buy Bitcoin clearing houses, to drop the bitcoins off into the local economies where they were terminating them. So, for instance, a bank could move a few million dollars from the United States to England, and once in England, it could have its clearing house for the bitcoins, where people could come and buy the bitcoins for roughly the market rate. Once there, the only purpose of the bitcoins would be to get back to fiat currency. But the money that would have been saved in transferring the funds via Bitcoin rather than by traditional means would be significant. The bank would occasionally profit by the price of the bitcoins going up when it is wholesaling them after using them. At no point would you expect the banks to begin speculating on the currency, but of course it is possible that it could when it was holding such a massive amount of bitcoins at a given time.
Certainly it would have an impact on the Bitcoin economy if banks were to begin using the currency to settle large transfers across continents, though the effects are unclear. On the one hand, it could have a large positive impact when the banks go to buy the bitcoins to transfer them. On the other hand, it could consolidate too many bitcoins in the hands of bankers, which could unduly sway the future of Bitcoin. This would be a side effect that had not been anticipated but certainly is possible with any asset that has such a realistically low market capitalization. At this point, several billionaires could buy the whole of it outright if they could find all the coins.
The point, however, remains: banks could benefit greatly from the use of Bitcoin to settle their large transactions. The question of why they don’t engage its help is up in the air, but the truth is there is nothing stopping them.
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Last modified: May 21, 2020 11:05 AM UTC