When bitcoin started gaining momentum, the banking sector was looking upon the digital currency with contempt and decided that it will probably fade away soon. The outlook towards bitcoin made banks ignore the technology until bitcoin exceeded their expectations. However, once bitcoin and blockchain technology started offering alternative banking and financial services to the unbanked and underbanked people across the world at lesser cost and time, the banks started perceiving threat to their very existence.

Since then banks have invested heavily into the blockchain technology, trying to replicate the process followed by bitcoin to handle fiat currency. Most of the leading international banks have their in-house research team exploring ways to integrate blockchain technology into their everyday operations. There is also a consortium of over 42 banks is association with R3 to develop a blockchain network connecting all the partner banks. They intend to replace the existing SWIFT network to transfer funds over the blockchain instead at a fraction of time and cost.

At the same time, the banking sector is lobbying against bitcoin and other cryptocurrencies at the government and regulatory authority levels. They are also working on ways to deviate interest from bitcoin as a digital currency to blockchain as technology which has far greater impact than the former. However, they seem to have forgotten that the blockchain exists only because of bitcoin or some other crypto-token.

While the banking sector is planning to have a blockchain sans the reward mechanism, it is still not clear how the entire set up will work and who will be contributing the processing power to maintain and verify the transactions over the network. Also, what will those contributing the processing power for the upkeep of banking blockchain network get for the resources they share is something to be looked into.

Tags: , , , , , ,

Leave a Reply

We use cookies to give you the best online experience. By agreeing you accept the use of cookies in accordance with our cookie policy.