Opinions are still very divided when it comes to the subject of cryptocurrencies, and whether they are a good or a bad thing. Enthusiasts will praise the ease with which financial transactions can be made cheaply and securely. Critics will note that this very capability makes it easy for criminals to use the technology for money-laundering and drug trade. Other critics, most notably bankers and other people in the financial sector, will point to the volatility of the cryptocurrency market. But are there other reasons why the bankers have an ax to grind with the cryptocurrency community? Let us have a look at some of the possible reasons.
Cryptocurrency is bigger than fiat money
In terms of market cap, JPMorgan Chase is the biggest bank in the United States. That is good news for bankers who work for or with JPMorgan Chase. What is not good news is that the cryptocurrency market has a market cap of $470 billion, with the Bitcoin price breaking $10,000, which puts it head and shoulders above the US bank. Similarly, Bitcoin has a market cap close to that of the People’s Bank of China. The next biggest cryptocurrency is Ethereum, and it has a market cap similar to that of Morgan Stanley. Needless to say, this spells bad news for the banks. One of the measures they have taken to slow the progress of the cryptocurrency movement is to ban their customers from purchasing tokens with their bank-issued credit and debit cards.
The value of cryptocurrencies is rising
Although the market for cryptocurrency is volatile, the value of the main coins is on a steady incline. Bitcoin reached its all-time high in December 2017 shortly before the crash which made it plummet. In 2018 it has been gradually rising, and so has Ethereum. Although critics point to research showing that the value is on its way down again, experts claim that any dips are to be expected and will not impede the general rise in value. The CEO of JPMorgan Chase has previously criticised the concept of Bitcoin, but have since had to retract the criticism in the light of the success Bitcoin has seen.
Cryptocurrency is decentralized
The fact that cryptocurrencies are working on a decentralized network and cuts out the middlemen is a huge cause for concern for the banking industry. It is easy to see why. Given that many people in the banking industry works as middlemen, the rise in popularity of cryptocurrency could cost the bankers a lot of jobs. The cryptocurrency community is also very collaborative, and many members are sharing tips and tricks on how to best trade on the exchanges. This means that even the financial consultants are at risk of losing their jobs to a message board. Combined with the fact that transferring cryptocurrency is safer, faster, and cheaper than transferring fiat money, it is easy to see why the bankers do not like cryptocurrency.
What do you think will happen with the banking industry once the cryptocurrencies of today become the norm tomorrow? Leave your comments in the section below!