With the successes recorded by Cryptocurrencies and ICOs so far, it has shown more advancement than what traditional financial institutions offered over the last century. The current run of Cryptos with it’s Peer to Peer framework is going to put banks out of business with regards to certain services. Interestingly, banks are coming to realize that Cryptocurrencies are threats to their business. “An invention similar to the combustion or steam engine with the potentials and prospects of a total transformation of the financial sector landscape and beyond.” That’s how French banking giant BNP Paribas described Cryptocurrencies in a report published in 2015. The United Kingdom banking sector also opined that Cryptos are changing how business is done, with a fall in the number of customers over the past 5 years.
Easier Means of Doing Business.
Banks plays a mediatory role and P2P will eliminate the need for such services. With this in mind, Cryptos is already disrupting a 400 years old method of doing business and there are indications there are more to come from Blockchain technologies. Banks may be hesitant to embrace the new change due to fear of going out of business.
Faster Access to Finance
In the words of Chris Skinner who authored Digital Bank: Cryptocurrency will lift many out of poverty. Individuals without access to financing from banks ten years ago can do it today with clearly articulated ICO whitepaper. Those turned away by traditional financial institutions have been presented with a better alternative; Cryptos. No need going to banks for financing as peer to peer networks can make it happen with less stringent rules.
Trust of The Unknown
Before moving to “pursue other” things in 2011, Satoshi Nakamoto was credited with saying “the core problem of fiat currencies which banks control is the level of trust necessary for problem free functioning”. Banks are trusted to hold cash and make them available electronically, but they also go ahead to lend it out for profit making. With traditional financial institutions, aside deposits, trust is hugely invested. We trust banks never to allow identity thieves take over our finances. There’s a lot of trust invested in traditional financial institutions. However, that’s where Cryptocurrency wins, all you need is to trust yourself with security measures put in place by the wallet owner. The Crypto proof of Satoshi’s invention is deemed secure than the trust of the unknown.
Embrace or Obliterate
With the ongoing revolution which started in 2009, banks are left with limited options. In the early days, it all seems like a fad or a bubble that will go into oblivion with time. However, since Bitcoins in 2009, many other Altcoins have emerged. This has made it obvious that Cryptocurrencies has come to stay. Banks are left with only an option of employing Cryptocurrency technology into their services. In any event, if the traditional financial institutions look away, they will be swept away by the philosophies of Cryptos.
In the final analysis, banks cannot keep up with the pace of the disruptive tendencies of Cryptocurrency technologies. Right now, banks have to do more or be forgotten.