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How Do Traditional Banks View Bitcoin?

Bitcoin emerged in 2009, and we realized it was time for something new again. Back when credit cards and other forms of plastic money came into the picture for the first time, we had a similar realization, but somehow we coped up with it. Now they are almost like part and parcel of our lives. Experts think that the same is going to happen to cryptocurrencies. But how is the scenario going to change concerning traditional banks? Let us find out.

Some salient features of Bitcoin:

  • A type of digital currency
  • Decentralized in nature 
  • Cryptographically secured
  • Functions with the help of Blockchain technology

The hype involving the crypto world is so profound that it can impact the traditional banking system. Now such a wave of discussion will invariably lead to questions like “Will Bitcoin take over fiat currencies?”, “Will fiat currencies become obsolete?” etc. Let us look at the various views concerning Cryptocurrencies and the traditional bank.

 

1. Electronic money is already doing the rounds

The powerhouse of fiat currencies – the central banks produce all their money electronically. Hence what we know as cash is only the tiniest part of a vast system. Advocates of cryptocurrency can argue on this line and claim that the entire idea of digitized money is nothing very new. Furthermore, digital options like plastic money have also earned their place for a long time. So, it is not like traditional banks only mean fiat currencies as many of them are already electronic.

2. Crypto is not taking over fiat currencies right away.

The thing with central banks is the air of trust that they could have generated over all these years. Most customers of a particular bank visit the place due to its promise in confidence. Experts believe that it is difficult for a mere technology emerging out of nowhere to replace fiat currencies as we have always known it. Bitcoin, to date, faces terrible scalability issues. While a blockchain network can only take up limited transactions every second, services like Visa operating under a bank handle way more transactions than any other alternative ever can.

3. Cryptocurrencies will nonetheless impact financial systems.

Using cryptocurrency has its perks. It performs transactions at lightning speed, giving a far better record than traditional online transactions. International payments are also quick with cryptocurrency. With the reduction of transaction costs and empowering beneficial settlement features, crypto soon can at least try to reach all strata of society, allowing more and more people to associate themselves with the idea of digital currency actively. Several countries are also noticing small crypto transactions taking place with time, and they think it is a vital sign for the finance world.

4. Crypto might even beget significant challenges for the banking industry.

It is a fact that the crypto universe is not entirely stable. It is infamous for being highly volatile. However, this is not the case with traditional money. Experts fear that if things go as per the current rate, then very soon, the crypto market will become successful in toppling over the functioning of various banks. The central banks are already finding it challenging to keep up with the desired financial stability. Moreover, people prefer to trade crypto in software like bit-qt.app for investment purposes, thus turning away from traditional banks.

Signin screen

5. What if banks issued their preferred cryptocurrencies?

Whether banks will issue their cryptocurrency or not is an ongoing financial discourse. While most banks prefer regular currency, some are reviewing this decision. The governments of Tunisia and Ecuador have issued their digital currency, while Sweden is thinking of taking a similar step. However, coming to a unanimous decision regarding this would be more than difficult as various countries have their own sets of financial regulations, and cracking all of them down and implementing the digital format is a lot of work for everyone.

Conclusion

Traditional banks view Bitcoin as an intelligent and risky competition to itself. The functioning of banks and Bitcoin differ from one another, and it will instead be wrong to say right away that only one of them will make it to the top.


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How Do Traditional Banks View Bitcoin?

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