Blockchain and bitcoin have come under intense scrutiny in the past few months for the good reason. It is always advisable to exercises caution when dealing with anything that increase price parabolically. The risks are always very high. Politicians, banking experts and TV pundits have weighed in on the matter and many have given negative opinions on the matter but the standing matter is that blockchain cannot be ignored anymore.
Many leading financial institutions in the world are facing a dilemma on whether to follow the advice of the media as well as governments or stand up and invest in the new cryptocurrency technology.
Many financial institutions thrive on stability. This is why they are always careful of anything that goes up by over 3000% in a period of one year. This has been the case with the whole cryptocurrency market which has been powered by the blockchain technology.
According to Richard Crook, the head of emerging technology at Royal Bank of Scotland, the benefit of blockchain technology are as a result of decentralization and it is very difficult to replace one technology with another minus changing the business model.
The main challenge and threat that financial institutions are facing is that of decentralization. It is their job to control and centralize the flow of money between citizens and their countries. Major financial institutions like Citibank and JP Morgan are full of anxiety because the whole concept of cryptocurrency is against their business model of controlling people’s money so as to make profit. Many banks also reject cryptocurrency because it is anonymous in nature.
The World Economic Forum which is taking place in Davos will hold its first discussion on ‘the crypto-asset bubble’. Advocates of crypto are supporting the technology arguing that it is resistant to fraud, censorship and offers an immutable transaction record. No bank, centralized government or corporation can offer the same and at the same time maintain a tight hold on data and finances.
Cryptocurrency has already featured on Wall Street with a number of major exchanges and major banks and houses are offering to clear them.