Bankers Hate the Cryptocurrency World

Back in 2008 when the unknown entity operating under the pseudo name Satoshi Nakamoto published the book Bitcoin: A Peer-to-Peer Electronic Cash System, the financial world was on the verge of what will perhaps be the greatest disruption of the century. Bitcoin (BTC), using the revolutionary blockchain technology went on to become the foremost, most popular and currently the highest valued cryptocurrency in the market. With time, several other cryptocurrencies such as Ethereum (ETH), Litecoin (LTC), Ripple (XRP), Bitcoin Cash (BCH) and over 1000 others have sprung up to share the marketplace with Bitcoin.

Cryptocurrency is often referred to as virtual asset; it has no physical value and exists purely as digital assets. For all its much talked about volatility and lack of regulation, cryptocurrencies have seen a major upsurge in value in recent years and from predictions of top market analysts in the industry, this is a trend that is not likely to end soon. For cryptocurrency owners, traders and investors, this is a welcome news. However, a set of people that may take no delight in this turn of events are the bankers.

There is no denying the fact that the disruption of the financial world by cryptocurrency is probably least favourable to the bankers putting into consideration a number of factors. One of such factors is the fact the value of the crypto market. The biggest bank is the United states is the JPMorgan Chase bank and in February 2018, with the crypto market hitting a cap of $470 million, the overthrow was complete. The Bitcoin market cap alone exceeds the Bank of China, with the market cap of Ethereum comparable to that of Morgan Stanley.

Cryptocurrency has experienced a mind-blogging upsurge in value. From reaching parity with the dollar to steadily trading at a value above $10,000 in less than 10 years, the growth rate of Bitcoin left the banking sector shaken, enough for Jamie Dimon, CEO of JPMorgan Chase to retract his statements about calling cryptocurrency ‘a fraud’.

In January 2017, Bitcoin was trading at about $1,000 and just before the year ended, its value reached an all time high of almost $20,000 to a coin. Though the value has stabilised over time since the overwhelming increase in December of 2017, one thing is certain; at this rate, it is only a matter of time before cryptocurrency phases out regular currency and by extension, banking operations. Expectedly, the bankers are worried about the possible consequences of such an occurrence and are taking great strides to curb its activities with several banks placing a ban on cryptocurrency transactions for their customers.

Another contributing factor to why bankers hate cryptocurrency is because of the lack of regulation. Cryptocurrencies are not regulated by any central bank or government of any country. Furthermore, cryptocurrency transactions are usually untraceable, there is no way to track the legitimacy and validity of funds within a customers account and this could be a frustrating feat.. In cases where money can be traced, the bankers will have to investigate the funds, ensure the owner is tax compliant and file a report to the IRS for banks in the US and OECD CRS for European based banks. All in all, cryptocurrency transactions come with extra work and no one likes extra work.

Also, decentralization of cryptocurrency owing to the implementation of the disruptive blockchain technology is another reason for bankers to hate the crypto-world. Decentralization eliminates the need of a third party to facilitate transactions between two users as the community verification of the blockchain takes care of that. More so, the blockchain allows for faster and more efficient transactions plus its immutable and incorruptible database, where the banking system once again falls short. Now if the role of bankers is removed from the system, of what essence are they to users? Bankers do not want to be replaced by a virtual technology and as such, their hatred for the system is soundly based.

Conclusively, with the increasing number of ICOs and the ever fluctuating value of the digital assets, cryptocurrency will remain a threat to bankers and a big hurdle to cross for the banking sector as a whole. A time will come when cryptocurrency will be as widely accepted and used as fiat currency and until then, bankers will continue to hate the cryptocurrency world.