Repost: Forty Seven Bank

Credits: https://medium.com/fortysevenblog/
The emergence of cryptocurrencies is an aftermath of searching for better alternatives to current fiat money, the result of discontent among businessmen and ordinary people with the established banking system. According to the managing partner of DTI Alexander Butmanov, the popularity of digital currencies is explained by the willingness of society to use them. The lack of transparency in banks and countless rules created to guarantee protection from fraud complicate the system and make it cumbersome, while causing irritation among its clients.
Digital currency advantages for commoners
Cryptocurrency is easy to store, move and share. When you store money in a bank, you must take into account the withdrawal limits and be prepared for the risk of losing money in the event of bankruptcy of the company. When issuing or receiving large amounts of money, bank has the right to learn everything about the transaction — why it’s being done, how these funds were earned, etc. As for Bitcoin — you own it completely and have the right to spend it however you like.
Due to the known speed and control over coin emission, one cannot be afraid of unexpected inflation. The widespread distribution of cryptocurrencies will lead to a noticeable reduction in cost of the payments, will increase the transparency of transactions and make them more secure.
Active introduction of digital currency is beneficial for the society from any perspective.
Bitcoin = future standard?
Bank of Canada consultant, professor of the University of South Carolina Warren E. Weber offers a financial system with an idea of ​​using Bitcoins as a currency standard instead of fiduciary ones. He draws a parallel to this cryptocurrency with a gold standard: in both cases, there is no control by the authorities and emission is limited (21 million coins and a calculated volume of gold). The adoption of the Bitcoin standard would allow to predict the level of prices for goods and services (due to the stable speed of the introduction of new coins to the market) and to redirect investment resources from protection against exchange rate fluctuations to other tasks requiring attention. This would ensure the stabilisation of the financial system.
However, according to the analyst, the Bitcoin standard is not beneficial for the government or for the central banks, because it cancels interest rates and earnings by issuing money. In addition, cryptocurrency as a whole brings difficulties in creation and management of regulations that effectively administer it.
Cryptocurrency is a friend of leading banks
While introduction of cryptocurrencies would generate a lot of unreasonable costs for conservative banks just in order to implement the idea, large international banks, on the other hand, are very interested in its growing popularity. In 2014 fintech company named R3 CEV LLC was established with a goal to create a private blockchain and in the end developed the Corda project, introducing the frictionless commerce to the world.
Four well-known banks — UBS, Deutsche Bank, Santander and the Bank of New York Mellon, which are included in the R3 CEV LLC, plan to introduce a new digital currency on the basis of blockchain — utility settlement coin in 2018. It will be used for corporate financial transactions among banks. Unlike Bitcoin, there is a specific subject issuing this electronic money.
Utility settlement coin will reduce costs and simplify the conduct of transactions: bargains will be concluded in cryptocurrency and then be converted into the usual banknotes in central bank. It will allow to save financial and human resources on recalculation of international transactions with local exchange rates and will reduce the time needed to perform payment procedure. The scale of these four banks forecasts a good turnover of the utility settlement coin.
One should also not forget Citigroup with its Citicoins or Goldman Sachs with their SETLcoin.
Distrust is melting
Over the last few years regulators’ attitude towards cryptocurrencies is becoming softer and softer. In the state of New York government institutions began to issue licenses for operations with Bitcoins, while in Germany, it was recognised as a means of payment. The US Federal Reserve, Bank of Canada and Bank of England are studying the possible benefits from regulated circulation of cryptocurrencies. They analyse the security of transactions and the possible impact on the stability of the whole banking system.
These changes bring us closer to a technological breakthrough in the world of finance — they are able to become our first step towards the refusal of traditional money. And this first step will be taken only when the profit of using these latest technologies will overcome the costs of implementing them.