Cryptocurrency Banking- A Futuristic Concept in Motion Today

Banking the unbanked has been the goal of banking institutions around the world. The largest banks on Earth, including the Bank of America, Citigroup, JPMorgan Chase and Lloyds of London relentlessly pursue customers and aim to control the flow of money around the world. Cryptocurrency banking is beginning to take off, and is a revolutionary concept that will change and influence the flow and usage of capitol around the world.

What is a cryptocurrency bank? How is it different from prior cryptocurrency schemes and platforms? A cryptocurrency bank is an institution that performs the traditional functions of a bank including accepting deposits, making loans, facilitating transactions and investing in businesses. In essence, a cryptocurrency bank is just like the bank your checks are deposited into, that you pay your mortgage through and that issue your credit cards.

Cryptocurrency banks already exist. Bitwala is a German cryptocurrency bank with deposits insured up to $100,000 Euros. This bank operates much like a traditional bank, with all the same functionality you would expect. Current legal framework in the United States views cryptocurrency as a commodity, not a security, which creates a series of hurdles for cryptocurrency banking.

In order to transact with cryptocurrency, one must convert their cryptocurrency into fiat dollars, pay the resultant fees and record a cost basis and then complete the transaction. This is a difficult and messy way to conduct business. The key to cryptocurrency banking can be found in the original mission of Bitcoin itself, which is to make all holders of the cryptocurrency a bank. We can in theory conduct all business functions of traditional banks if we transact between ourselves, and leave the middle men out of the equation.

What is the end game for cryptocurrency banking? It is to decentralize what has traditionally been a system that benefits the wealthiest and most connected individuals, as well as granting access to billions of "unbanked" individuals. According to Business Insider, there are 2-billion people on Earth today with no access to banking services.

Cryptocurrency banking is in its infancy. The immutable nature of the blockchain and the public ledger sets up a strong framework. Trustless systems and smart contracts are taking the work of lawyers, and automating these functions. Trustless mortgages and car loan processes are a possibility with the proper legislative backing, which would lower their cost and allow the 2-billion unbanked to participate in such transactions more easily.

Sources:

Picture from Pixabay.

https://cointelegraph.com/news/what-are-crypto-banks-and-how-do-they-work

https://www.businessinsider.com/the-worlds-unbanked-population-in-6-charts-2017-8