Many people on the internet are curious about the cryptocurrency since the last Bitcoin bubble. Some want to get rich, others – to understand it better. To feel more secure, they turn to familiar authorities like banks, where they ask, “Will banks use cryptocurrency?” And all we can say, “Is it even a question”? They already do.
While peer-to-peer networks, including those based on blockchain, are becoming more and more popular, traditional banks are starting to realize the risks they face. So what does cryptocurrency mean for banks? Are cryptocurrencies a threat to banks? In short, yes.
Those banks who were paying attention are already taking action. To stay relevant, many of them have started experimenting with blockchain technology. At least several of them have created their own cryptocurrencies, like JP Morgan and JPM Coin. Initially, JPM Coin will be used only for a small amount of the USD 6 trillion daily transactions, which it moves in its massive payments business. Thanks to the new technology, money transfers will be executed much faster than the current standards – almost instantly. Another excellent example of the financial giant trying to adapt new blockchain technology is Wells Fargo. Recently it has announced its plans to launch a blockchain platform for international, domestic money transfers with stablecoin backed by the U.S. dollar. The bank claims that new technology will allow removing intermediaries, cutting costs and supporting transactions during non-operating hours. The testing should be completed in 2020, and if deemed successful, Wells Fargo promises to add other currencies to blockchain transactions.
For now, banks tend to use blockchain for cross-border money transfers, and it seems that new technology shows a lot of potential within that field. While “normally” international transactions can take anywhere from three to five working days, blockchain allows speeding up the process to near-real-time conditions. According to Gartner, at least 25% of cross-border payments involving U.S. banks will use stablecoins circulating across the blockchain. So the train is has obviously left the station.