Crypto: Banks trying to be the popular kid in school
Banks have always been against crypto, whether it's going publicly against crypto or closing clients and company accounts because of their association with digital currency. Such as J.P Morgan, one of the loudest ones when it comes to bashing digital currency.
Does leaning toward blockchain mean they are befriending crypto?
On the contrary, banks have always been the popular kid in school. Running our financial system for the longest time and applying the rules they want to play by. As consumers with limited options, we have always abided by these rules; nonetheless, technology has made everyone up their game. Financial entities have created different platforms for clients, plastic cards, wire transfers, among others.
Crypto has been the first one to stand up or challenge these entities, and because of this, they have been bombarded with critics by many in the banking system and government.
How did crypto manage this?
This was done by the genius idea to create a decentralized currency that would run on blockchain technology, and it would allow a universal digital currency to run without the need of third party entities to regulate, limit it, etc. The times are changing, and we have a new kid in school, and that is cryptocurrencies.
Banks moving towards crypto:
“America’s largest bank, JPMorgan Chase, has always been outspoken about how non-fiat cryptocurrencies are bad (the company’s CEO, Jamie Dimon, has always slammed Bitcoin, anyway). But the investment bank looks favorably to the blockchain, and last year it became one of the first major U.S. banks to create its own coin using the technology.”
“… New York-based Signature Bank had months before already created a token using the Ethereum platform, named Signet. To kick off 2020, Signature Bank announced it was working in partnership with blockchain-driven trust company, Prime Trust, in order to allow the company and their clients to utilize Signet to fund and settle their accounts in real-time.”
The Benefits that crypto and blockchain have brought are huge. The rapidness to transfer money anywhere in the world, elimination of third party entities, programmable, and much more. An obvious threat because crypto does not discriminate if you want to participate in it, it's faster than transferring fiat cash from one bank to another, especially if these are international transactions.
Although banks have been working on moving towards "decentralization" using blockchain technology, it does not mean they are moving towards cryptocurrency. Trying to take a very used name lately, such as blockchain and trying to apply it, however, they can and implement it to the banking system. Nonetheless, banks support centralized fiat currencies. So how will those fiat currencies (USD, EURO, CLP) ever be decentralized; they won't. So is it necessary or justified to apply blockchain technology to the banking system? I believe it's more of banks trying to make efforts to jump on this revolution that bitcoin brought, but not losing the fact that they control money.
By: Carolina Pérez