During an interview, Tom Robbinson, co-founder of Elliptic explained that banks are changing their perspective towards technology, and looking at blockchain as an effective solution to offer better services.
Technology blockchain, the underlying technology behind the cryptocurrencies, , is playing a fundamental role in the transformation of financial services, which is why more and more traditional banks are beginning to experiment with new platforms and services based on this technology.
The idea of traditional banking is to endure over time and continue offering financial services to clients and users. Thus, with the aim of not dying in the future, banks are seriously considering adopting blockchain to develop and offer new products that attract younger clients, who are no longer captivated by traditional financial products but are being seduced by the power of technology and digital currencies.
To Tom Robbinson, co-founder of blockchain analytics platform Elliptic, the growing interest of the masses in cryptocurrencies, especially Bitcoin, is causing large banking entities and financial institutions to consider providing services with this and other cryptocurrencies in the near future. Robbinson pointed out during a interview who has seen a “massive increase in inquiries from various financial institutions that are seriously considering launching some form of cryptocurrency service”.
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Asia and the United States among the most interested
The first to show interest in adopting blockchain technology and cryptocurrency services were banks on the Asian continent, explains Robbinson, who has received several requests for consultation from banking entities to learn about the compliance risks of offering this type of services. Likewise, the co-founder of Elliptic points out that traditional banks in the United States are second among those most interested in offering cryptocurrency services, followed by banks in the United Kingdom.
Banks' interest in adopting blockchain technology and the new asset class that accompanies it is rooted in the recognition of the potential offered by this technology, capable of greatly simplifying the provision of financial services in a fast, efficient, secure, transparent and reliable way, and also economically.
Cryptocurrencies, the money of the future
It is no secret that traditional banking is currently facing major problems, and the COVID-19 pandemic, which spread worldwide in 2020, caused these problems to become even more entrenched within traditional entities. The global pandemic accelerated the arrival of a new economic crisis, and the measures imposed by governments to counteract the situation are causing a major depreciation in the value of fiat money.
Although fiat currencies such as the dollar and euro remain the most dominant currencies in the global economy, their value is being overshadowed by the power of cryptocurrencies and digital assets. In fact, the Deutsche Bank, one of the largest and most important banks in Germany, has repeatedly expressed that cryptocurrencies are the money of the future, and that the permanence of fiat money in the global economy is at stake. Most recently, this bank published a report where he sentences the existence of fiat money, and limits it until the year 2030. In his opinion, by this year the existence of fiat money will have no meaning, since the market will be dominated by cryptocurrencies and digital assets.
From trust in governments to the true value of money
Deutsche Bank explains that the potential offered by cryptocurrencies, whose value is not backed by any government, entity or commodity, but is demonstrated through their multiple applications, functions, benefits, use cases and more, is making fiat money appear weak; that which has no real value, but is based on the trust that society places in the promise of a government, and in its ability to maintain the value it promises.
“The forces that have maintained the current fiat system now appear fragile and could unravel in the 2020s.”
The entity points out that since there is nothing real to back up the value of money, it becomes very tempting to print it excessively and in large quantities, which in turn drives inflation levels out of control, and reduces the value of money and the purchasing power of society. During the economic crisis accelerated by COVID-19, the United States printed more money in one month than it used in the last two centuries, said the CEO of Pantera Capital, Dan Morehead, En a letter.
For Morehead this is reason enough to “get out of paper money and into Bitcoin”Deutsche Bank, for its part, notes that if the forces that sustain the current fiduciary system are “undone,” cryptocurrencies, and possibly gold, will emerge as the new money.
Blockchain for new banking services
In addition to the important role that cryptocurrencies may play in the next decade, blockchain technology is currently revolutionizing the way in which financial and banking institutions can provide their services to the public.
This technology allows banks to carry out transactions and payments with a high level of transparency and security, reducing the risks of manipulation and fraud, and guaranteeing absolute and efficient control over the assets under management. Likewise, blockchain technology gives banks the opportunity to develop innovative products and solutions that allow them to position themselves as technological leaders at a global level.
Deutsche Bank cites China as an example, whose central bank is working on developing a blockchain-based service network, known as Blockchain Services Network (BSN), and in a digital currency CBDC call DCEP (Digital Currency Electronic Payment)With these digital products on the blockchain, China seeks to internationalize its currency, the yuan, and challenge the dominance of the US dollar as the world's reserve currency.
“The PBoC intends to replace cash with a central bank-issued digital currency. The aim is to support the circulation and internationalisation of the yuan.”
A future still far away
Despite Deutsche Bank's assessments of Bitcoin and cryptocurrencies, the bank notes that the positioning of these assets as full substitutes for money is still far from happening, and is projected to take place in the next decade; as cryptocurrencies are still considered "additions" and "complements" in the current financial system. Still, banks are moving towards adopting new technologies to offer highly efficient cutting-edge services.
Robbinson highlighted the announcement by BNY Mellon, the world's largest bank with more than $41.000 billion in custody, that it will soon offer Bitcoin services as a demonstration of the growing interest in cryptocurrencies from traditional financial institutions.
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