Where banks fail, blockchain companies step-up
Events around the world are exposing the limitations of mainstream financial systems, most recently are the natural disaster caused by Hurricanes Harvey and Irma in the Houston area of the United States.
Banks are becoming naturally exposed
Banks became inoperative due to reasons such as damaged infrastructure and inaccessibility, hence the people resorted to alternative means of transactions.
This development only expounds the existing limitations within the financial ecosystem where a huge part of the global population are either underbanked or absolutely unbanked.
A bitcoin trading company recently intervened in the rescue operation of a group in the hurricane ravaged area of Houston when they could not access bank services to carry out their mission.
In this case, the founder of an over the counter (OTC) trading company UTXO, LLC, Rob Gonzalez collaborated with Jesse Wilkinson, a well-known OTC trader in Dallas/Fort to facilitate the purchase of a truck for The International Church of Blerk while banks were inaccessible in the area.
Blockchain systems are organically motivated
The CEO of Netcoins, Michael Vogel notes that while it is true that natural disasters can have impacts on traditional banks and financial systems and their ability to operate, there are many more chances for man-made disasters to affect banking systems (recently we saw India throttling bank withdrawals as part of their “war on cash”).
However, interesting micro-economics and technological aspects aside, the robustness of Bitcoin and its decentralized nature is what intrigues many people the most about the cryptocurrency.
Vogel emphasizes on the efforts being made to open up the accessibility of Bitcoin across the globe since the cryptocurrency is continually proving to be a viable and more efficient alternative to existing financial systems.
He says:
Netcoins’ prime mission is to make Bitcoin accessible and easy to purchase. In most of the world, bitcoin is difficult to purchase, however once users have bitcoin it’s relatively easy to send and spend it. Beyond our roots in Canada, Netcoins is partnering with businesses around the world that want to bring our Virtual Bitcoin ATMs to their respective countries.
The challenges of a growing industry
CEO of Cryptopay, one of the longest running digital currency service provider in Europe, George Basiladze explains that despite the isolated successes recorded by using blockchain to achieve effective transactions, the technology is still in its very early days.
However, Basiladze explains that there already exists a couple of challenges for the growing industry of digital currencies. He identifies finding the right banking relationship as one of these challenges:
When looking at the emerging blockchain ecosystem you see a lot of banks including financial services business taking a much more risk adverse approach. On one hand, the banks have very high overheads and processes to adhere to, which make it difficult for startups and SME’s to secure banking partnerships.
With that said, Basiladze notes that we are beginning to witness banks opening up to crypto-banking business and providing services. He states that his company depends significantly on legacy financial services as it is its model to introduce these traditional and trusted services to crypto customers.
To this end, Basiladze notes that his company is embarking on a token sale slated to begin on October 2 2017 in order to expand the company’s capacity in providing a seamless exchange between crypto and conventional assets. A secondary reason being due to requests from customers and users who are seeking to invest into the hitherto successful cryptopay project.
The road to mainstream adoption
Considering how effective blockchain-based transaction have performed, and how it is growing in popularity, it would be expected that mainstream adoption of the system should happen sooner than later.
However, certain fundamental factors have hindered, or rather slowed down the significant adoption of this technology.
Basiladze identifies some of such factors holding back customer adoption as the lack of legacy financial services, which are available. He spots this as the precise reason why Cryptopay has built a blockchain payment gateway to bridge that of legacy financial services with that of innovative technologies available via blockchain.
Another key aspect holding back mass adoption is regulation. Without a clear regulatory framework many investors and businesses are still nervous to be associated or involved with crypto related activities but as the ecosystem grows so will the options to increase consumer adoption.
The development of any region is directly connected to how effective its financial system operates. In a world where the rate of unbanked and underbanked citizens has become a serious cause for concern, blockchain services appear to perfectly slot in as ideal solutions to the developmental problems of the world.
Apparently, the world in entering a phase where blockchain-based financial services can no longer be ignored completely.
