The reason that FIAT currency still rules over cryptocurrency is because of the traditional banking model. Banks and other financial service providers have made it so easy for us, as consumers to store and spend money. We can use cash, we can use card, we can use cheque and we can even use our fingerprint these days. Many people believe that true Bitcoin adoption won’t happen until we see a similar model for cryptocurrency hit mainstream communities. It’s a bit of a paradox actually because the idea of Bitcoin is that it removes the need for banks, but the honest truth is that we as consumers do love the ease of use our banks provide us. It’s convenience, and frankly, Bitcoin needs to be more convenient.
Banks offer us many other services, from lending through loans and mortgages to other financial services, much of the cryptocurrency industry is yet to move into this territory so again, here’s another market that is set to be explored by Bitcoin in the future. Known as DeFi, or decentralised finance, the area is now starting to see some growth however. According to Cointelegraph:
“Decentralized finance (DeFi) has quickly become a buzzword. By allowing people to connect to new decentralized lending, exchange, savings and other DeFi platforms, blockchain can provide a cryptocurrency alternative to traditional banking services, and those who are comfortable operating in this ecosystem are therefore able to wield their assets with greater fungibility. Make no mistake: DeFi is not banking, as it only mimics banking functions and is still unable to provide the other thing banks are valued for — i.e., security.”
To become a crypto or Bitcoin bank, firms need to start offering further services than just the facilitation of Bitcoin storage and payments. Cryptocurrency exchanges like Coinbase are sort of halfway there, but a lot still needs to be done before these Bitcoin banks can become a real thing, helping Bitcoin adoption along the way.
What does the future hold for this industry? We know real, brick and mortar Bitcoin banks will exist in the future, no matter how paradoxical they are. The industry demands for innovation and banks are the next step in ensuring the longevity of Bitcoin as a part of the mainstream future. We’d all love Bitcoin to exist as a secret asset that makes us money, but frankly, if we truly want Bitcoin to succeed, we all need to open our arms and hearts to the first Bitcoin banks, which I’m sure we will all be doing soon enough.