Taking Your Bitcoins to the Bank; How Robocoin is Changing Everything

 Currently, when cryptocurrenciesinvestors want to deposit or withdraw the currency of choice from their account wallets, they do so through the platforms offered by exchanges. That's all well and good for the time being, but to the average person the system can be a little confusing and intimidating—which makes them hesitant to invest in, and use, these unique financial tools. The summer of 2014 could change all that, as innovations are being set in motion to make the digital currency world more familiar and accessible to the average investor.

A local company here in Austin called robocoin—which is already in the process of introducing Bitcoin ATMs to the world—has plans to carry the concept a step further, in the form of what they call Bitcoin banks. The use of the term “banks” is intended to give them a familiar spin to people outside the digital currency world, but insiders are raising eyebrows at its motherboard put it, “That’s one word you’re perhaps not used to seeing in relation to Bitcoin: 'bank.'”

Indeed, one of the core concepts behind digital currency is that it isn't like a bank—at least, as most people have come to understand it. Unlike regular banks, cryptocurrency has no central regulatory agency; its control and well-being are solely in the hands of its investors. Again, the use of the term “bank” is meant to put a more user-friendly face on the new technology. Asthe wall street journal commented in a recent article:

Those descriptions might be a bit imprecise: The word “bank” tends to imply lending facilities, which won’t be on offer. This is perhaps more of a custodial service.

That's as good a way to put it as any: the Bitcoin banks are designed to make the storage, depositing, withdrawal and transfer of cryptocurrency easier for both parties involved in transactions. At its heart is a method in which traders can dispense with the ten-minute wait that accompanies most current transactions. Right now, in order for transactions to be verified, the data block in which the transaction's information is stored must be mined, or validated; this process (with Bitcoins, at least; it varies with other currency types) can take up to ten minutes. By tapping into an already-existing and -verified account, Bitcoin bank users can transfer funds without that ten-minute wait.

The “banks” themselves will be an interconnected network of Bitcon ATMs, each of which is licensed to a third party by Robocoin; these individual ATMs will be referred to as “bank branches.” Security will be a feature here, as well; ATMs will require a phone number, personalized PIN, and a biometric scan of the user's palm. Transfers can be made to other accounts, or even phone numbers; the recipient will get a notification that their funds are available, and they can go to the nearest ATM or “branch” to pick them up.

This use of phone numbers for cryptocurrency transfers will be good news to iPhone users. Apple's guidelines for mobile apps includes language that restricts the use of third-party payment systems; this, in effect, has killed the use of Bitcoin apps that involve transfers of any kind. The use of Bitcoin banks will help users bypass that headache.

As we noted before, traditional banking services such as loans are not part of the Bitcoin banking system—at least for the time being. Robocoin is currently the only business involved in the creation and implementation of Bitcoin banks—but you can rest assured there are other entrepreneurs and developers waiting in the wings to see if the concept takes off. The entire concept is summed up neatly in a recent article on the subject from techcrunch

What does this really mean in practice? Well, first the language around Bitcoin access will change from wallets and transfers to accounts and deposits/withdrawals, thereby reducing some of the fright factor of standard BTC systems. Because you will be able to control multiple wallets (now called accounts) you can create one for a point of sale system, one for savings, one for checking, etc. It’s a perception thing that will improve adoption