Why Banks Fear Bitcoin
When you receive money, you usually either spend it directly or deposit it into your bank account. Using your money, banks offer loans to other customers or invest in the markets. The system normally works to everyone’s advantage, but financial institutions occasionally go bankrupt, and it’s possible that you could lose your money.
The most recent example of this occurred during the financial crisis of 2008 and its aftermath. When a government does not have sufficient income to cover its expenses, it can ask its central bank to print more money. However, this means that the purchasing power of the national currency is reduced, as the money already in circulation is effectively devalued.
Bitcoin originated from this crisis and was born out of the belief that people should have access to an alternative financial system and a currency that is neither created nor controlled by any government or central bank. Bitcoin thus became the world’s first cryptocurrency. With a promised maximum of 21 million coins and almost 17 million coins already created, the value of Bitcoin depends entirely on market forces: basic supply and demand.
The idea behind a cryptocurrency like Bitcoin is that there is no third party involved to verify and validate a transaction: users can transfer money directly between one another. The traditional process, of course, is not instantaneous: it takes a couple of days and often incurs high fees. This is why banks fear the success of Bitcoin – it could become the currency of the future, free of the influence of governments and banks, enabling rapid, inexpensive, direct and private transfers.
The anonymity at the heart of Bitcoin’s appeal is another major issue for banks, since they can’t keep an eye on how clients use their accounts, which kind of transactions they make and with whom. On the distributed public ledger where all Bitcoin transactions are freely available, even though everyone can see the transactions themselves, there is no private data to display.
New cryptocurrencies are being launched all the time, with over a thousand blockchain-based altcoins now available to trade, and millions of investors around the world now wanting to take part in this monetary revolution. International cryptocurrency brokers offer the opportunity to invest in the most popular coins, such as Bitcoin, Ethereum, Iota, Ripple, and Litecoin. Bitcoin trading platform UFX is one of the most highly regarded across the online trading industry, since it offers some of the most advanced tool and charts, as well as highly favourable trading terms.
