Satoshi Nakamoto, the anonymous creator of Bitcoin, published the white paper on his research in 2009, bringing together existing concepts that could facilitate a fair online currency. The currency is important because it functions as a decentralized public ledger, allowing people to track assets in a verifiable and relative way around the world. Just like banks that invest in Bitcoin, you can also make profits by trading Bitcoin at BitlQ
No one can change the transaction book without anyone noticing, so it’s a fair way for people to exchange goods and services. Also, the basis of these rules is a consensus, so all users are responsible for the system. This feature ensures the integrity of the system and allows improvements to be made if the improvements benefit the general public. So far, we’ve seen several of these improvements, and developers continue to add cool new items to Bitcoin from time to time. It is a dynamic code base.
Another intriguing aspect of Bitcoin is how all transactions on the network are recorded on the blockchain, allowing us to see the history of all transactions in real time. We can track your movements around the world, which is useful for auditing. However, people can also use it to track the history of a specific token or asset. For example, if we were to “tokenize” cotton, we could see how particular units of cotton could move through a local supply chain and eventually become a finished product. That’s to the advantage of many different interest groups for a variety of reasons. It’s something some have wanted for a long time.
Why some banks have started investing in Bitcoin
Several financial institutions are protecting their investments and taking Bitcoin seriously. They want to be part of your expansion. Blockchain, ledger technology, and digital currencies will play an essential role in these institutional banks. Investing in some of the early Bitcoin companies gives them an idea of how the industry is evolving and access to the developed technology. Trust us that they will incorporate that technology into their existing infrastructure.
If financial institutions have started investing in Bitcoin, why not invest in this powerful technology?
How banks can incorporate Bitcoin
Banks could use blockchain or a public or semi-public ledger to complement current interbank settlement networks such as Swift or ACH. Banks would reduce prices and compliance risks by implementing blockchain. Also, because it is a rule-based and protocolized technology, there is much less chance of human error occurring.
Banks could also use Bitcoin in novel ways, they could “tokenize” the loans and then sell them in a flexible and traceable way on the market, or say they want to offer products and services in markets where they currently do not exist. Suppose a New York-based bank wants to serve a community in Southeast Asia. That would not be easy to do today. Still, with a digital currency, the bank could potentially reach that new market without having to convert the fiat currency of that local community to the bank’s local currency.
Also, there is security. Bitcoin is at the forefront of cryptographic technology. By integrating these new concepts, banks would add advanced security features such as public key encryption and private key message signing. As a result, consumer protections would be stronger.
Would you advise banks to invest in Bitcoin?
Many experts would, particularly with the big banks. Many have BTC working groups that are actively investigating the potential of the technology. What many experts would advise banks to take seriously. We saw what happened with the recording and publishing industries and the banking industry cannot be left behind. Banks would do well to integrate some of these technological advances into their business models. We have success stories like iTunes, Pandora, “The New York Times” and Bloomberg: they embraced new technology instead of fighting against it.
