Why are Banks Opposing Cryptocurrency?


Bitcoin and other emerging cryptocurrencies have never been left untouched by the inevitable clutches of the government or financial intermediaries. Ever since its revolutionary introduction in 2008, Bitcoin has always been a hot topic across all social media outlets. Whether it is regarding their volatile nature of the unprecedented opportunities that come as blessings in disguise, cryptocurrencies remain a highly debatable topic. As per experts, the bitcoin code is a trusted and user-friendly platform to learn and start crypto trading.

Every user and critics hold their respective opinions, but the recent crackdown on cryptocurrency and blockchains is a topic worth discussing. The proponents of cryptocurrencies exalt them as an alternative to highly regulated financial intermediaries and governance systems. The increased prospects of transparency and faster transactions have attracted millions of users to cryptocurrency today.

Is It an Equitable System or Doomsday for Conventional Banks?

The concept of the equitable and new financial system executed on a peer-to-peer basis is the last thing any bank would want to envision. It takes them out of the picture as cryptocurrencies enable the users to carry out highly secured transactions without the involvement of a third party, i.e., Banks.

Critics, on the other hand, view cryptocurrency as a predominant platform for criminals to operate without being tracked by the authorities. With absolutely no involvement of the legal system in the cryptocurrency mechanism, Banks also try to warn unsuspected users to abstain from carrying out transactions through cryptocurrencies. However, the reality is not as grim as it seems, as cryptocurrency has ushered in a new age of technological developments that have enabled millions of users to break free from the traditional authoritative systems.

Governments and banks across the country and beyond the international borders continue to view Bitcoin as a threat, whereas countries such as El Salvador have already made it an official currency.

Will Banks be able to put a leash on the cryptocurrency?

Another significant reason banks do not want the cryptocurrency transition is that people can easily evade the capital controls established by the government. Bitcoin acts as leeway for users to circumvent the apparatus that traditional banks have set. Furthermore, the chances of nefarious activities surge significantly as criminals can easily avoid being caught.

Cryptocurrency has severely exposed the loopholes that were being used by the financial intermediaries to exploit the wealth of users in the form of transaction fees. This is one of the numerous reasons people switched to the crypto industry so quickly without giving it a second thought. The decentralization of the financial system has awakened millions of users, and it poses a colossal challenge for the banks to overcome.

Central banks are pretty vocal about opposing Bitcoins and have also asserted that such cryptocurrencies operate against the public good. Further stating that such digital tokens entail limited redeeming features by undermining the essence of the financial ecosystem. Banks have been able to stay stringent in terms of regulations imposed that compels the crypto users to think twice about using one.

Is the Environment in danger again?

Banks view the crypto industry as speculative assets that are being used extensively for money laundering purposes. The rise of ransomware attacks, along with other cybercrimes, can be directly attributed to the surge in the usage of cryptocurrencies. Furthermore, the rampant use of Bitcoin is debilitating to the environment as it is believed to consume 707kwH in just a single transaction. The additional energy consumed by computers is yet another detrimental impact of using Bitcoins.

Is this form of anonymity safe or crippling?

Efforts to regulate the dynamic spread of cryptocurrency have gone in vain, as it has been decades since such efforts were initiated.  Cryptocurrencies eliminate the need for intermediaries entirely as the transaction is carried out faster between the two parties involved. The entire financial infrastructure operates freely in the crypto industry as the power to regulate the flow of currency does not lie in the hands of any single authority.

Moreover, extracting the true identity of an individual in the blockchain network is next to impossible as users can only be identified through the address that they have on the network. This mechanism promotes illegal activities quite seamlessly, and there is nothing much that anyone can do about it as the network is not regulated by any governance system.