Banks are still cautious about Bitcoin, which directly affects Bitcoin-based businesses.

When it comes to the banking industry, banks want a piece of the pie. They are cautious about Bitcoin, but at the same time they are exploring ways to integrate Bitcoin technology into their banking operations.

On one hand, all the big international banks are moving pretty fast towards incorporating blockchain technology into their operations. However, on the other hand, they are not very eager to provide banking services to Bitcoin companies.

Since 2013, Bitcoin has shown a strong growth trend. Over the past 7 years that the digital currency has been in existence, its rapid growth has captured everyone's attention. The development of Bitcoin has also seen the birth of many startups that provide innovative financial services based on Bitcoin. These services are far cheaper and more efficient than traditional financial services. In addition to financial services like remittances and fund transfers, Bitcoin, combined with its underlying blockchain technology, has begun to gain a foothold in the field of financial technology.

Banks keep their distance from Bitcoin

The huge potential of Bitcoin in the banking and financial technology applications has posed a threat to banks and financial institutions. The banking and financial technology fields still rely on traditional systems, while Bitcoin technology is something new for them. Their hostility towards Bitcoin and Bitcoin-based companies is mainly due to the following reasons:

• Bitcoin is a decentralized virtual currency. This means there is no central authority that dictates what happens to the currency. In other words, if Bitcoin becomes widely accepted, banks will have little control over the Bitcoin-driven economy.

• Bitcoin became very popular after it was widely used on deep web markets such as Silk Road. Initially, Bitcoin transactions were considered to be an ideal currency for purchasing illegal or prohibited substances due to its anonymity. It has since been proven that the digital currency is not as anonymous as initially believed. At best, Bitcoin transactions are anonymous. However, Bitcoin continues to be the currency of choice among criminals and hackers. There are many instances of extortion, hacking and kidnappings that have begun demanding Bitcoin as ransom. Bitcoin ransomware attacks are still affecting computer users around the world. Another negative factor is the notoriety of Bitcoin coupled with various strict banking regulations that require reporting of illegally obtained funds. It is almost impossible for banks to determine whether funds related to Bitcoin are legally obtained. For security reasons, they tend to distance themselves from digital currencies related to business. Even if this means driving away most legitimate corporate clients. This in turn affects these businesses.

• The lack of regulation in many countries is another reason why banks are hostile to Bitcoin and related businesses.

• With the recent recognition of Bitcoin as a financial instrument by national and central banks, regulations regarding Bitcoin will soon be introduced. Once the Bitcoin regulations come into force, Bitcoin will gain legal status, which will have an impact on banks, which would rather defend their profits by lobbying in vain against digital currencies than risk losing their business by starting to accept Bitcoin.

Although banks are cautious about Bitcoin, they are aware of its existence and have ignored Bitcoin and blockchain for a long time. Now they are worried that if they don’t upgrade their services to match what Bitcoin offers, they will perish. So now they are investing heavily in adopting Bitcoin technology in addition to Bitcoin itself.

Recently, some banks have opened their doors to Bitcoin while others continue to find ways to eliminate digital currencies instead of embracing the technology that will allow them to survive.

Original article: http://www.newsbtc.com/2016/02/27/banks-wary-about-bitcoin-affect-business/
Author: Gautham
Compiled by: Kyle
Source (translation): Babbitt Information (http://www.8btc.com/banks-bitcoin-technology-business‎)