By Bill Taylor, Managing Editor
Horse and buggies, steamboats, pay phones (and booths) have disappeared and now……….banks? Well sure, and it may already be happening all because of bitcoin. When bitcoin “burst” upon the global scene, it caused people to “look under the hood” and discover the thing that makes bitcoin and all cryptos go – blockchain. Going with the premise that bitcoin is a form of currency, (yeah, I know, just go with this) and was designed to be a virtual form of payment around the world, this obviously lessened the need for a bank account. Or, for that matter, a bank. Using bitcoin’s blockchain distributed ledger technology is something like having multiple banks verifying every transaction. Faster and cheaper too.
Banks have been somewhat caught off guard with the speed of how fast this new technology has grown. They should have paid more attention since mobile phone companies began leapfrogging over them a while by back becoming payment intermediaries, enabling customers to transfer cash and other credits by mobile phone. The mobile network was in full swing and traditional banks, snoozing, were already behind the curve
So, back to bitcoin as a currency. Bitcoin is certainly not the best suited cryptocurrency for a medium of exchange (although that is changing rapidly) but other cryptocurrencies are lining up to be THE digital global currency. All this, again, lessens the need for traditional banks with their outdated clearing infrastructure and high cost structure. Now even global central banks are at risk of becoming obsolete.
Of course the central banks will fight tooth and nail to stop the advance of cryptos like bitcoin since they will lose their countries ability to manage (print money) monetary policy and will certainly begin to relinquish power and control. But remember, bitcoin and the blockchain distributed ledger technology is global with NO central regulatory body and free of political pressures. Exactly what it was designed for. The genie is out of the bottle and banks, both large, small and central are way behind the curve.
Daddy, what’s a bank?