Will Banks Be "Amazon-ed" By Cryptocurrencies?

in amazon •  last year

Authored by Huw van Steenis via The FT,

How technology disrupts the payments system gives policymakers pause for thought...

Few issues in central banking are more likely to provoke anxiety than the fear of losing control of one’s currency.

The past few days have provided another perfect illustration of this point. On Monday the Chinese central bank banned initial coin offerings of bitcoin-type currencies, leading to a fall in the value of some cryptocurrencies of as much as 20 per cent.


Behind the scenes, there is growing uneasiness about how disruptive technology may be to the banking and payments system. Over the summer both the Basel Committee on Banking Supervision and the World Economic Forum put out lengthy papers on their concerns and the state of play.

So far, the big winners from new technology have been clients.

Fintech innovators in banking appear to have been less disruptive than expected because they have largely failed to change the basis for competition in such a regulated industry, the WEF report argues. Instead, technology has led to a marked improvement in customer service and a sharp fall in the cost of payments.

But, beyond resilience to cyber attacks, there are three broad concerns.

First, will the banks, which they have spent so much time trying to make safe, be weakened by new entrants? Simply put, will banks be “Amazon-ed”? Bankers used to think regulation would make financial services less appealing for new entrants. But now the penny is dropping that non-bank rivals can target more profitable areas and skim the cream, leaving regulated banks less profitable.

Second, will banks become less important as more lending shifts beyond the regulatory perimeter? Since 2009, swaths of business have moved from banks to asset managers. More than $600bn has been raised to fund private debt, according to market data company Preqin. As a result, policymakers are spending more time analysing the non-bank sector. The growing dependence of banks on large technology firms to run their infrastructure is also giving policymakers pause for thought about who is systemically important.

Third, would central banks lose control of payments if privately issued bitcoin currencies were to take off?Issuing currencies is a lucrative business as central banks pocket the difference between the cost of issuing a coin or bank note and its face value.

Central banks also fear their ability to monitor the payment system would fall.

Given the global fight against terrorism and organised crime, this is an acute concern. In an extreme scenario, central banks fear they may even lose control of the money supply.

Until recently, policymakers had not worried too much about cryptocurrencies - they provided few benefits as a currency, apart from to those simply trying to hide their tracks. They are not a “store of value”, as Monday’s move showed. They are not widely enough accepted to be a useful medium of exchange. And digital currencies have failed to be as secure as promoted — they have been successfully hacked several times in the past 12 months.

But as cryptocurrencies grow, we should expect more central bankers to look to outlaw or crimp their use. This will be most acute in markets that are worried about capital flight and organised crime. This will not stop speculators and enthusiasts, but will limit their potential to create the powerful network effects that would make them a useful parallel currency. But perhaps these concerns should prompt central banks to make their own currencies more appealing. Clearly, more efficient protocols for electronic payments would help and there is much to learn from bitcoin technology.

But more profoundly, this is another reason why the European Central Bank, Bank of Japan and others should look to exit their dangerous experiment of negative interest rates sooner than later.

Source : http://www.zerohedge.com/news/2017-09-10/will-banks-be-amazon-ed-cryptocurrencies

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This is relevant :

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"It is the currency of illegal transactions of choice right now."

Horseshit. There are still more illegal activities paid for and financed by the USD than all of the crypto put together.

It is amazing that people buy this bullshit.

This is what big time drug money looks like...it isnt bitcoin.

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But you see that narrative needs to be sold so as to cause enough confusion in the markets :-)

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Yes very true. The banksters need to try and hang on to their control with King Fiat reigning supreme. Crypto and blockchain threaten to put them out of business. What if nobody needed banks anymore and their scams? The talking idiots on tv drink the Kool Aid while aiding and abetting the heist.

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You upvote your own comments and come and flag others?

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Blockchain is starting to penetrate every area of commerce. The bankster system is archaic and one of control. Like you said, they are not about to give this up easily. However, I believe we are starting to enter a new Internet age...one where decentralization and personal profit are the norm. Instead of a couple entities controlling the entire system (through their different silos) we are going to have choices available to all. Steemit is not that far off the track with their idea of disrupting the social media realm.

Will the central banks win? They have a lot of power and the politicians are their puppets. This is a difficult thing to overcome. Time will tell how powerful this sector becomes.

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Great article. Crypto replacing the banking industry as the medium a peer to peer medium of exchange eliminating the need for their services and depriving them of their "cut" will cause massive monetary loss on their part. This cannot be understated.

More importantly, when the first credit is issued in crypto, this will be the major disruptive force that will shake the foundations of the banking industry. No more fractional reserve banking when it comes to lending, but lending in it's purest form will inevitably emerge. Stabilization of a currency will no doubt be needed to achieve this or some system to compensate will need to be put in place, but this will eventually happen, and when it does, it will truly shake the foundation of the banking industry.

It seems banks will be in a serious problem in the future because of cryptocurrencies...Anonymity, peer-to-peer transcations without of supervision of third party are main concern...If banks want to stay in monetary systems-they must evolve,and find other ways to protect their interests..Fiat is going to history,it is obvious

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Very true. The banking establishment is under attack from all side. Mortgages are now available online. Organizations are able to get funded from crowdfunding campaigns instead of beholding themselves to the banksters. People are storing their money in the crypto world as opposed to a saving account. Alternatives to the banksters are popping up in terms of investing, borrowing, and lending. Even micro lending is taking a chunk out of their pockets.

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Banks will come out with their own crypto currencies and will say "if you want to transact with us, use our crypto" - this is what Ripple will encapsulate.

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I dont trust them The blockchain is a threat to them but I do not underestimate their ability to control things. They have the politicians in their pockets and spread the news as they see fit. It is a powerful 1-2 combination.

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Can you let us know which crypto-currencies' blockchains have been hacked as you mentioned about?

It will be 100% and that is good for us we can we can celebrate :)
We dont give our money to banks :)

The Central Bankers have been the force behind wars and assassinations for hundreds of years. Look at the occult symbolism on a dollar bill! This will not be a fair fight.Alternative currencies may win out. It is up to us.

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