The virtual currency is making a comeback after a turbulent year. The International Monetary Fund is giving it a vote of confidence and the banking sector is focusing on its development.
You can’t mention Blockchain without mentioning Bitcoin. The virtual currency is the symbol of blockchain technology technology which aspires to change payment systems. Bitcoin has been at the center of scandals since was launched in 2009, although proof of the fact that it is becoming stronger can be found in the first statement by the International Monetary Fund about virtual currencies. The statement, made in January, says that “Virtual currencies and their technology can provide quicker and cheaper financial services which could become a powerful tool to take financial inclusion further in a developing world”. Many people think that this is the time when Bitcoin is entering its mature phase after six-and-a-half years surrounded by irregularities and some fraud cases. Even the founder –who has disappeared, who is faceless whose name is even in doubt– of the virtual currency has been nominated for the 2016 Nobel Prize in Economics.
He was nominated by American economist Bhagwan Chowdhry who says the following about the virtual currency founded by Satoshi Nakamoto: “Bitcoin, which exists purely as a mathematical object, offers many advantages over both physical and paper currencies. It is secure, relying on almost unbreakable cryptographic code. It bypasses governments, central banks and financial intermediaries such as Visa, Mastercard, Paypal or commercial banks eliminating time delays and transactions costs.”
Bhagwan Chowdhry also points out that “the consumers will be big beneficiaries and indeed the poor and marginal sections of the society will reap the benefits of financial and social inclusion”.
Bitcoin seems to be entering a golden age after quite a few dark years. When it was created, the banking sector was very wary of it, while rebellious geeks, cyber-anarchists and followers of the anti- globalization movement embraced the virtual currency. They saw it as an anti-system way of competing with the capitalist model. It was also a way of laundering money or committing tax evasion…and this was evident in the fluctuations of the currency: in January 2013 it cost 13 dollars, more than 1,000 dollars nine months later, before falling again to 300 dollars.
Support from banks
The banking sector is currently supporting Blockchain technology. BBVA is part of the group of international banks that are looking at what this technology could bring to their business, and they have placed their trust in an American startup, R3, to develop applications using this technology in the financial sector. This project currently includes around 30 global banks, including BBVA (which featured among the founders in September this year), Bank of America, Barclays, Goldman Sachs, HSBC, JP Morgan, Morgan Stanley, Société Générale, BNP Paribas, Canadian Imperial Bank of Commerce, ING, Commerzbank, UBS, and others.
Also at the beginning of 2015, BBVA invested in the largest wallet of virtual cryptocurrencies in the world, Coinbase, which includes an exchange service that allows users to buy and sell and then.
Banks have arrived on the scene late, although they have come to realize the revolution that is coming. This revolution does not only affect payments. According to BBVA Research: “the greatest of a public accounting system could go beyond payment systems. Because most financial assets, like bonds, securities, derivatives and loans are already electronic, some day the whole system could be replaced by a decentralized structure. In fact, the most recent innovations use tokens to store and market assets like securities, bonds, motor vehicles, houses and staple food commodities”.
“The so-called “colored coins” carry additional information about the asset, which generates a “smart property” or the ability to record and conduct transactions with these assets using “smart contracts” via complex algorithms through distributed platforms without a centralized log, increasing their efficiency. In this regard, the current system in which financial institutions record individuals’ accounts in a centralized database and banks’ reserves are stored in the central bank (for example, the Federal Reserve) would be replaced by the “Internet of money” or the “Internet of finance”, a fully decentralized financial system”.
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