Goodbye cash: Central & private banks going blockchain with crypto
“Mom, can I please have a 0.0001BTC (Bitcoin) to get some ice cream?”
That’s what kids will be asking their parents to send over mobiles or any portable electronics and replace the “I need a Dollar/Dirham please” we are used to hearing.
That reality is closer than you think, for good reasons, and it’s why central banks and private financial institutions want you thinking crypto.
Crypto central banks
Only 8 percent of global financial transactions today involve cash, but that figure will diminish even further as digital currencies gain prominence, said Stratfor, a geopolitical intelligence platform headquartered in Austin, Texas.
“Faced with the growth of cryptocurrencies such as Bitcoin, central banks around the world will continue their research into introducing their own digital currencies could pose a profound threat to the commercial banking business model,” said Stratfor.
Central banks are the safest repository for the funds of other banks since its fate was tied to and guaranteed by the government’s own balance sheet.
As part of global demonetization efforts, “Cash currently accounts for just 8% of global transactions, and its use may diminish.”
The decentralized form of blockchain and its digital currency Bitcoin induced concern among governments because they lack control over the currency.
“Hoping to contain the threat posed by private cryptocurrencies, several central banks, including the Bank of England and the U.S. Federal Reserve, have begun research into whether to issue digital currencies,” said Stratfor.
“Sweden’s central bank, the Riksbank, has led the way in efforts to launch a digital currency, the e-krona. Venezuela has rolled out the most advanced digital currency so far in the form of the petro last February 20, and Russia’s cryptoruble is the central bank digital cryptocurrency that is closest to becoming a reality.”
Stratfor said that Estonia is also thinking of launching a cryptocurrency, the estcoin, to help it raise funds while also buttressing its pioneering virtual residency endeavor.
“Most consequential, though, are China’s efforts to issue a digital currency as the People’s Bank of China has emphasized its intent to introduce a crypto that will enable the central government to better track the movement of money.
Central Bank benefits
Digital currencies operating under the auspices of a central bank would greatly increase efficiency in digital transactions.
“Under the current system, a digital payment must first go to a private bank and then pass through a central bank before arriving at another private bank. Implementing digital payments at the central bank level would eliminate the need for a third party thereby accelerating the whole process and reducing transaction costs,” said Stratfor.
“The rollout of central bank digital currencies could introduce a giant rival into the banking market and compel commercial banks to become ultracompetitive in their lending practices.”
Well, private banks are already ahead of the game.
Crypto private banks
According to a white paper by Crypterium, a new and prominent crypto-bank, in 8 years’ time, the crypto-economy will exceed $10 trillion.
“Cryptobanks will become a cornerstone in the relations between decentralized economy and future daily life by expanding payment infrastructure and possibilities, creating new cryptocurrency payments scenarios and lowering interest rates,” said Crypterium.
It added that crypto banking’s worldwide will be borderless, offer 8x lower transaction costs and are 100x quicker, reach a potential audience of 200 million, and produce $500bn in expected revenue for crypto-banks by 2025.
“It is estimated that crypto economy by 2020 will exceed $3trn, and by 2022 be equal to 10% of world GDP,” said Deloitte.
Mobile payments will be a big part of this development.
“Between 2015-2020, mobile proximity payment volume, such as Near Field Communication (NFC) and QR Codes, is expected to rise by an annual growth rate of 80%, according to IDC Financial Insights.
A global cryptocurrency benchmark study found that there are already 3 million daily users of cryptocurrencies.
Crypterium said that comparative data between traditional and digital banking (using blockchain-based banking) showed the cost of transactions going from 5% to 0.5%, from several days to minutes, from bank controlled funds to client controlled, and from currency conversion fees of 5% vs 0%, respectively.
Bitcoin Crypto bank, Bankers, European Crypto bank, irfio (crypto AI Banking), are some of the new emerging banks in the field.
Flying crypto ATMs
Forbes writes of “Bitcoin ATM” operated by Coinsource becoming mainstream with over 250 Coinsource ATMs located across the US.
Once a digital wallet is in place, blockchain transactions allow for the transfer of Bitcoin and other cryptocurrencies in a peer-to-peer fashion, without any intermediaries involved.
“In the case of Coinsource Bitcoin ATMs, Bitcoin holders who wish to exchange their digital assets for fiat currency only require a cell phone. Users simply download the “Coinsource Bitcoin Wallet” app to send and receive Bitcoins by scanning a QR code using a cell phone’s camera.”
Here’s a strange metamorphosis on this.
“MANNA Robotics is a startup based in the San Francisco Bay Area that has created a “blockchain-based drone” and token called MANNA, which is used for instant, local deliveries, where Manna participants wishing to receive fiat or cryptocurrency simply have to request money via a mobile app,” said Forbes.
“The MANNA drones will then deliver the cash amount requested directly to users at their doorstep.”
It said all transactions are secure, as money is held in digital escrow until successfully delivered, usually within 15 minutes or less by drone.