Crypto makes headlines readily, and I suspect this will occur for a long while as the asset is still in its young childhood, and hasn’t hit it’s full understanding. A lot of it’s future comes with understanding where crypto currencies are in our society as a whole.
Today’s banking appears technologically advanced. With the advent of Venmo, Cash App, or Zelle money can transfer via the phone fairly quickly. In reality banking technology is far from being at the level of the internet. Think about how long it takes to perform an ACH transaction between banks. It can be a day or even a week in some cases.
If you compare digital banking today to that of writing a letter when the internet first started you can start to see how far banking has to go. Today, most letters that are written start digitally via email, and are sent and received instantaneously. Emails or digital documents today can be edited from different locations at the same time as well. Digital banking, today, is much like what letter writing went through when the internet first started. It’s archaic compared to the state of the internet.
New Forces in Crypto
New forces are now present in the digital currency world with crypto currencies that can create instant transactions at a fraction of the cost. The reason traditional banking is behind the curve has a lot to do with fiat currencies regulations. If banking firms don’t get out there quickly they will be replaced.
Some of the early pioneers of this movement speculate that these digital crypto housing firms that are using the newest technologies could swell large enough to buy banks. It sounds crazy, but it could be a very real future. Most banks today are trying to play catch up to the early adopters like Square, Paypal, and others. Crypto transactions can happen almost instantaneously on sites such as Gemini, Blockfi, or Coinbase.
New networks such as the Lightning Network, which was built to solve Bitcoins latency, are making these instance transfers a reality worldwide. It is realistic for a transaction to occur between someone in the US and Finland as an example on the Lightning Network instantaneously, and they have flexibility and lower costs.
Crypto currency acceptance is moving quickly with the likes of firms like Visa, Blackrock, MassMutual, and other big firms stepping into the realm. It makes sense. The US is devaluing the dollar in order to inflate the economy. Bitcoin’s scarcity creates a different place than gold to put money and limit the potential of devaluation. Historically, each year 1.5% of new gold is mined creating a slow dilution of gold, and gold isn’t usually used as a form of payment for a transaction.
With the futures exchange regulating crypto currencies there will be more futures contracts and greater acceptance of the currency for various reasons which may over time lower the volatility of the coins. With the recent advent of discrete log contracts attached to Bitcoins now Bitcoins can be sent along with a contract much like Ethereum. This just adds one more benefit to the coins over other forms of barter.
The speculation is that Bitcoin won’t ultimately be used for a cup of coffee purchase, but it could be used as a form of payment for larger transactions. If there’s an ability to attach a contract to the transaction then it could fulfill many options worldwide and change the landscape of banking’s future.
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