New Technology Will Change Banking

New technology has shaken and fundamentally changed many industries including the music industry, the media industry, and the retail industry. Many now believe it's banking's turn. Bitcoin is well positioned to win the race, but there are other possible paths of development.

 

Just a few decades ago people bought music on vinyl records. Now people pay Spotify to stream music directly to their phones. We no longer have video stores in every shopping center; instead, we have access to a much wider selection of films through web-services such as Netflix. The same goes for retail.

In your mind, does it seem likely or not likely that banking will be disrupted (changed dramatically) by advances in technology, just like so many other industries have?

 

The Change Has Already Begun…

Bitcoin is not the geeks-only Internet currency that it was a few years ago. Today you can use it online to pay for many products and services, for example at Overstock.comExpedia.com, and Webhallen.com.

In Japan bitcoin gained legal status as an accepted means of payment (in April 2017) and in the Swiss municipality of Chiasso you can pay your taxes with bitcoin (which was announced in September 2017).

In countries where the financial systems are unstable, bitcoin is and has been widely used. In Venezuela, bitcoin is used instead of the Venezuelan Bolivar because of the country’s hyperinflation. And Cyprus saw a large upswing for bitcoin during their 2013 financial crisis.

 

…But Bitcoin May Not Be the Winning Technology

Right now, it appears to be fairly clear that new technology will fundamentally change the banking industry. However, at this point in time, it’s uncertain which new technology will be the winner.

Although most analysts believe that the future of money-transfers will be built on blockchain, it might not be the bitcoin blockchain. There are already many different blockchains. Another cryptocurrency called Ripple has their own blockchain which is built for interbank transactions, and Intel and Microsoft have built their own private blockchain with more privacy than the bitcoin blockchain.

Several commercial banks including Nordea, Handelsbanken and Swedbank are testing out different blockchain- and bitcoin solutions. According to DI's sources, more than 10 people at SEB work full time on different projects related to blockchain. Since May 2017 Skandiabaken’s Norwegian customers can see their bitcoin holdings in their online banking platform.

In March 2017, Riksbanken, the Swedish central bank, announced a project where they will evaluate the possibility of an e-Krona. According to their time-plan, they will decide at the end of 2018 whether or not we will get e-Krona.

 

Concluding Remarks About Whether Bitcoin Will Change Banking

Although central banks, commercial banks, and established big IT companies are (or might be) developing their own blockchains, many of the benefits of the bitcoin technology can only be reaped if the system is worldwide, and run by the users rather than central institutions like banks or big companies.

But then again, there is more to this equation than what makes theoretical sense. We also have to account for things like politics and psychology.

Even if governments and/or big banks make their own cryptocurrencies, it may be possible for world-wide user-run cryptocurrencies like bitcoin to exist at the same time.

Bitcoin could continue to be used in the same way it is today, for certain circumstances where it is more practical, such as international trade and internet transactions. And it could be a valuable alternative currency at times of turmoil in other financial systems.

Many interesting discussions can be had over where bitcoin and blockchain might take us in the future. Please share your thoughts and discuss on our live chat forum.

2017-08-20

Disclaimer: The information in this article, as all content on BlockBull Review, is not and should not be seen as investment advice. The information is for educational and/or entertainment purposes only, so use it at your own risk. It is possible to lose money when engaging in any investment including cryptocurrencies and past performance does not indicate future performance. Any opinions expressed are those of BlockBull Review's writers who are not broker-dealers or advisors of any kind.


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