It’s a new year, and despite years of ominous warnings from Traits of Bitcoin, banks and the traditional banking system are still alive and well. The one endgame that did happen was Vitalik Buterin’s announcement of a completely new Ethereum 2.0 roadmap in late 2021.
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Regardless of whether the crypto market would improve as a result of this roadmap, 2021 proved that crypto did not destroy or harm central banks in the same way that traditional banking did not kill crypto. Why?
To be honest, neither side was spared in the conflict between the two. Many crypto enthusiasts have been screaming about the impending catastrophe of the world’s monetary systems, while others have portrayed a gleaming crypto future in which everything can be purchased with Bitcoin (BTC). Bankers, on the other hand, hastened to defend the banking system’s traditional position, accusing blockchain technology of inefficiency and noncompliance. Each of the events is inaccurate in its forecasts.
Equal opportunities for recreation
Fortunately, neither cryptography nor traditional banking was eradicated, despite their best efforts. On the one hand, no major crypto job has avoided the tightest possible interaction with banks. Cryptocurrency exchange based in America Kraken obtained a banking license, and the Coinbase IPO process speaks for itself since it is a 100 percent play per banking and monetary system requirements. Only a few banks’ firms are used for many of the high-level tasks: Signature, SilverGate, and Frick Financial Institution — focusing settlement and enforcing banking laws for dealing with cryptocurrency.
The banking company, on the other hand, developed in-house ecosystems for crypto-related jobs. Visa has introduced crypto advising firms to help partners navigate the crypto realm. “To be the AWS of crypto,” Amazon Internet Companies (AWS) aspires. Switzerland has proposed financial companies to deal with cryptocurrency. SolarisBank even has a crypto-related API. The largest American banks and exchanges are developing cryptocurrency-related businesses. Bitcoin is recognized as a form of payment in El Salvador, which (theoretically) necessitates the need for global monetary institutions to be prepared for Bitcoin settlements with El Salvador.
What kept bitcoin from destroying banks?
Humankind. A huge number of new technologies have been managed by state authorities, either directly or indirectly through corporations, throughout human history. Radio, television, the internet, and social media all started with the intention of disseminating free facts and ended up in opposition to ultimate control. The same thing is happening right now with blockchain, and there’s no reason to think that will change anytime soon.
The majority of the time, people try to overestimate the risks to reduce the likelihood of a positive outcome. That, in my opinion, is why people have been and continue to be prevented from accepting cryptocurrency. As I previously indicated, though, this mindset is a part of human nature.
Despite this, why does centralization trump decentralization? It took a long time for international leaders to realize that blockchain technology could be more than just a problem, but also a powerful tool for undertaking political activities. As a result, the blockchain, which was created as a strong freedom tool, has taken on a completely fresh role, becoming a tool for money management to previously unimaginable levels. People utilize it for both peaceful and military purposes, similar to nuclear technology; the blockchain has two sides of good and evil.
Not exactly a loss
At first glance, the crypto needed to back up from the “hawks'” preliminary positions. In the end, it gained global reputation, distribution, and a wide range of clients all over the world, which looks to be a fair reward and a win over those who foretold its doom.
I believe that the widespread development of related Regtech technologies, which aim to speed up compliance processes and eliminate all potential checks, has led to crypto’s acceptance by traditional banking. These projects, which included alternatives for conducting Know Your Customer (KYC) / Anti-Cash Laundering (AML), demonstrated a crypto solution to banks: companies like Chainalysis and Onfido can build KYC procedures more efficiently while maintaining the processes’ absolute legality.
The newly-established companies couldn’t keep up with the bank’s track record of low-efficiency compliance, which is a major setback in any process. However, to conduct business in a credible environment, they complied on their own, but more effectively.
Will CBDCs, on the other hand, suffocate cryptocurrency? We must constantly stop talking about something being destroyed and instead think about what can be possible in the future. The interoperability of central financial institution digital currencies (CBDCs) is a challenge that has to be addressed. We cannot speak of a quick settlement because of the incompatibility of CBDC issued in multiple worldwide locations, the flexibility to modify them mutually, and the slowness of many federal government processes.
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