It is true Bitcoin, and cryptocurrency is faster and cheaper options compared to traditional finance. This is causing some panic among bankers, as they will need to address this challenge sooner rather than later. Doing so is a lot harder than anticipated, which explains their venture into blockchain technology in recent years.
Bitcoin Suisse founder Niklas Nikolajsen believes it’s only a matter of time before European banks will start offering bitcoin wallets.
Digital currencies like bitcoin are proven to be faster and cheaper than traditional banking methods, but the idea of banks providing bitcoin wallets remains far-fetched.
Andrew Hauser, executive director for banking, payments and financial resilience of the Bank of England, said that while financial technology may shape the way the central bank develops new systems, adopting blockchain for stock and bond settlements won’t happen anytime soon.
Blockchain, the technology behind bitcoin, makes use of cryptography to create a distributed ledger system to hold and spend money in a more open, transparent and flexible manner compared to the traditional bank or credit card companies.
The central bank executive said it’s easy to call for reform since settling securities transactions globally can be “extraordinarily complex and balkanized.” However, “there is no likelihood of such an extreme revolution occurring any time soon,” according to Hauser.
“Much more work is needed across a whole range of issues, including: speed and scaleability; confidentiality protections; developing common protocols; integrating cash and securities movements; and establishing regulatory and legal norms,” Hauser said, according to Fortune.
Blockchain is already being adopted by several countries into their own banking systems.
Switzerland is known for its openness towards the digital currency.
Earlier this year, the town of Zug in Switzerland decided to undertake a pilot program to accept bitcoin as a valid form of payment for municipality services, marketing itself as the go-to destination that welcomes the digital currency.
Of course, while Switzerland is considered a forward-thinking country, the Swiss capital of Zurich took the steps last month by refusing to allow bitcoin payments, going against the grain compared to the rest of the country.
While the banking sector is not too enthusiastic about bitcoin, they have taken to its underlying technology, the blockchain.
Now, though, it seems that putting block chain technology into practice may be difficult for banks. Simply because of the transparency that it offers, which many bankers are against due to the nature of their privacy.
For now, then, it seems as though banks won’t be changing too much with the banking system as they determine the best course of action for the future of finance.