Bitcoin Forum

How blockchain, the technology behind Bitcoin, could turn traditional banking on its head


Last year, in a commentary for Fortune called “Why banks fear Bitcoin,” MIT business professor Trond Undheim wrote that “banks are afraid of Bitcoin because it would force them to innovate.”

“Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve,”  Satoshi Nakamoto, the mysterious inventor of Bitcoin wrote in 2009.  “We have to trust them with our privacy, trust them not to let identity thieves drain our accounts.” In some countries, banks even banned any transactions connected to Bitcoin.

But lately, banks have been warming to the technology behind Bitcoin, called blockchain — using it to innovate, in fact — having recognized the advantages of the lightning-fast, decentralized transaction verification system as having broad applications for transactions involving everything from stock trades to money and property transfers.


http://business.financialpost.com/news/fp-street/how-blockchain-the-technology-behind-bitcoin-could-turn-traditional-banking-on-its-head

Perhaps it's different from other revolutions such as the paper to the digital for companies because this one isn't going to cost them anything.

The same topic has been discussed many times over. The banks can utilize the blockchain, but since bitcoin poses competition to them, they seperate their interest
in blockchain tech away from bitcoin.
imho it doesn't matter, bitcoin is advancing slowly, and taking away their fees and profits, and it's just a matter of time when they won't be able to ignore it anymore.

cheers

That was 2009, now it is six years later and banks have been forced to rethink some things, but as to be expected, it did not turn out to be that drasctic and the banks saw an oppurtunity to make a tech bubble make it seem they innovated and put the cost at the customers, spend money to make money, but they did not addapt to the basic idea of bitcoin, the decentralisation of the economy of money, the internet of things, that is where we are going, the banks took what they thought fitted within their grasp and existing systems and labelled it 'blockchain technology'. It is like the cheese on the frozen pizza's there is not real cheese in it, but they sell it as such.

Exactly. As soon as they have started cherishing blockchain technology only, it was a sign that they were starting to become afraid. Basically they are trying to separate the technology from Bitcoin itself.
They will try to upgrade and improve their systems so that they can keep up. The real question is, are people going to stay blind to their schemes?

Actually it is going to cost them everything as soon as Bitcoin picks up. Bitcoin is slowly growing, and as soon as some big retailers start accepting it, things will change. That would make Bitcoin overthrow any service such as Paypal in no time. However, the block size debate needs to be resolved before that can happen.

I hope it will work out this way.
Even though considering the little knowledge people have around this matter at large I'm not surprised at all if one day banks will start using their own blockchain technology and people will fall into it without even knowing of BTC existence.

They have the media, they could keep BTC at bay, but they do not understand how disrupting it is. This tech robbing happens regularly when non-disruptive.

That's right.They will be able to improve their internal systems.They will be able to trade stocks, bonds etc. without any third party.
They will be able to disintermediate the clearing houses and settlement systems that offer centralized control over transaction, security and equity clearing.This will be an enoumus reduce of costs and save them a lot of time.
But in how far will this have an positive effect for the customer?
I doubt that banks will reduce their fees that much.They are greedy and sneaky as hell!!
And what about the people in the world who don't have access to a bank?
Bitcoin still offers the main advantages and best solutions for all of that, especially in the long run when more and more Bitcoin companies innovate and offer their services.
Let's hope the people out there will realize that on day.

This is what I think... When Satoshi wrote that six years ago, he never thought that he would need to hide, and basically abandon his creation. Now his Blockchain technology is going to be used against Bitcoin.

These bankers saw it as a threat, then they saw a loophole <Nobody can claim it's intellectual property rights> and now they are going to change it a little bit and use it to crush Bitcoin with the help from the governments. As soon as their newly developed blockchain technology is released, they would work with the governments to regulate Bitcoin use, and to make their technology the de facto technology. <Because it adheres to the governments regulations>  

It's already happening, and with the amount of money that is being invested ion fintech, a lot of mew things will come to the banking industry in the coming years.

http://www.paym.co.uk/faqs

banks should not fear the innovation it should continue to update for progress in financial transactions.

Banks are probably frightened of something they can't control or issue, but it's obvious they themselves can benefit from blockchain tech. I still think even forcing banks to rethink the way they do business or lower their fees is a good thing, though I still don't think they can compete with bitcoins low fees as that's where they make a lot of their money.

Bankers are thieves. I hope banking system will collapse soon and bitcoin will be number one of world currency.

I think they can easily adapt Bitcoin in their payment systems. Banks are not doing their big money from sending money fees. They make big profit from interest. In fact money order fees are now "0" in most of the new banks.

they were scared briefly, I think.  They made some derogatory comments about btc, and Jamie Dimon was dead set against btc.

But now, being in league with the surveillance obsessed us gvt/nsa, they see that the blockchain technology can be used to further track people and their spending.

The banks will use the bitcoin technology for their own benefit, they don't care about bitcoin as a currency. They are more interested in the blockchain technology which would be useful or the banking industry.

Omg.
Satoshi knew from the first that he would have to hide. It's no coincidence he chose a pseudonym.

The rest of your post has some credibility, but then again bitcoin was designed from the start to be immune. I'm sure bad PR, bankcoin alternative, etc. will guide many users to that, but it won't change the inevitable rise of bitcoin.

They are frightened, the fact they aren't pushing an agenda to completely ban it is the proof. Those using their own blockchains will end up bankrupt anyway since sooner or later people will realize how dumb that is when you got internet (bitcoin) vs intranet (banks blockchains).

Banks are not affraid of bitcoin; instead they are trying to understand it and very soon will start to integrate it.

Yes banks will look into their own benefits rather than benefiting their customers, and that is the reason the banks are not coming in support of bitcoins, as they are very well aware that if bitcoins hit the mainstream than it would be difficult for them to survive in the market, and even if they get into blockchain technology it would not benefit the customers.

My theory is that banks are really afraid of not getting all the money they could from us. Now that they see why bitcoin is not going away and can't be killed, it is logical to try joining in and trying to leverage their money in the bitcoin economy. It makes sense too me.  ???

If banks really adopt blockchain technology in their system, their customers (non bitcoin user) would think that the technology is really helpful for them. Well actually I'm not really sure if the blockchain technology can working for bank or not, but seems it will attract people and they will think that bitcoin adopt blockchain from banks, since they have no idea about bitcoin before.

They are trying to investigate this because it is the future. Everyone knows that, if banks miss this moment of time and cling to old ways of processing money they could be in serious problems in the future.
Similar to Nokia fail - Nokia - the biggest cellphone manufacturer in the world missed smartphone revolution - and now they are shadow of company and exists only because Microsoft bought them.
If banks miss blockchain revolution tomorrow they could be gone.

That is exactly what banks are supposed to do, they need innovations as the population who used bitcoins grow. Usually most banks, Big Banks specifically, fear bitcoins because for them it's a business. Banks needs people money to run, but when people decided to used their money from their bank savings to buy or invest in bitcoin the bank has less money on it's books. In this way they fear bitcoin and sooner or later they will need to have an innovation to compensate.

Maybe we're starting to see a case of, "If you can't beat 'em, join 'em." The banks that find Blockchain tech useful will adopt it. But keep using cryptocurrencies that have nothing to do with banks, guys, because that's how we're really going to push it through their dense heads that now the concept that we don't really need banks or governments to have a viable medium of exchange has gone digital.

They are scared hence the "blockchain good ,bitcoin bad" nonsense they are trying to spin.

Yes the technology can work in a centralized way where only banks have a say on what goes there and who sees the ledger, but once people realize using the real thing (Bitcoin) is better, they will disregard those "bank blockchains" and use the global Bitcoin blockchain which is infinite times more secure.

Using 'real thing' has its problems, there is possibility of corruption or block alternation in open network. Also possibility of double spending because confirmation times can't be lowered due to security problems.
In closed environment these problems will be gone and system could be working even faster.

Wut?
I guess my only response to that is 'Hero member + signature' != 'Hero member'.

Lol, what do you mean with corruption? How many transactions have been corrupted since Bitcoin started? I can't think of a single transaction that ever got stuck corrupted in the blockchain. Eventually all transactions end up being confirmed and processed, they have to by design... double spending hasn't been a problem for ages.

Do you really think his intention was to hide or was his intention just to stay private, because this technology was so disruptive? He was active until talks with the agencies was established, and then he disappeared. The shelf life of Bitcoin will be gone, when the first regulated <BankCoins> comes into circulation. Take my word for it, it's just a question of time, who will win the race. Ripple has a clear start.   

How can the underlying technology behind Bitcoin, the Block Chain be that good, yet Bitcoin itself be bad?
Does not make sense, does it?


Nobody can argue with that I think.



No, they will create their own coin.
It's much less hassle for them and total control over it ;)



What would be the difference of using these "Bankcoins" over using a credit card?
There are no benefits that I can think of for a person to use these Bankcoins over credit cards (let alone Bitcoin).

It is clear that people don't flock to whatever makes more sense, and never have done.

Banks and firms can tinker with blockchains as much as they want, but ultimately it's governments/politics that decides what will be used as money because they are the greatest network, which is what money needs. Everything else that can be done with blockchain, like contracts and whatnot, depends on adoption too. The case has been made pretty solidly here: http://moraluniversal.com/en/why-bitcoin-cannot-win/

 As long as a part of people believe this, bitcoin could survive, however, the releasing limt of 21000000 is the vital defect of bitcoin for becoming main currency.

I dont think the problem is corruption, how can it will be happened? For double spending or confirmation times, I think it will be solved by banks, since they will take high fee for every transaction. So they will improve or add new features on its technology imo.

Yes and there are very least chances that bitcoin will affect the banking system, as there are many people who still have faith in the banks and would surely invest their money into the banks and not in the bitcoins and banks will never shut down due to bitcoins.

You had to live thru the times of the digital money startups I guess.
They all were squashed by governments, and founders ended up behind bars for the most part.  Certainly the creators were a central point of 'coercion'.

So yes, he meant to hide. Take my word for it. :)

So you think 2100000000000000 units of currency is not enough? Why not? you want a separate transaction for every particle in the universe?
Jeez.

I would say bitcoin has already affected the banking system. They are becoming more competitive. It's noticeable.
Whether a majority of people use a bankcoin is dependent on how well the banks do their PR, and how much lipstick they slap on that pig, but bitcoin will still be there ready to grab a bit more market share every time they slip up. This is a good thing.
Also remember bitcoin is global, and most people don't have banking.

It is more likely that Central bank will one day issue digital currency of their own, based on the fact that metal coins are expensive to manufacture (often costing more than their face value).

Bitcoin is a threat to them for sure but I don't think they have to be worried yet as it's going to take quite some time before bitcoin starts to eat into their profits but I hope its sooner rather than later. I think people are always going to need banks though but bitcoin will likely flourish in parts of the world where people do not have access to a bank.

Yes it is a blessing for those who don't have bank accounts, it would surely attract them towards bitcoins, and as of today we even don't need credit cards for online purchases as bitcoin is taking care of that too, so it would surely affect the business of banks.

I think its eating more into the payment processors profits than banks (paypal, visa, etc).  Plus the user base is SO small compared to those using traditional banks, I think they are relatively un-alarmed, but its definitely on their radar.

I dont expect banks to really try and attack btc until the userbase grows tremendously, and if they really wanted to attack btc, they could do so easily and severely, they have more than enough resources to do so

How about the bitcoin mining then? Are the electricity and anything that be needed in mining more expensive than bitcoin itself?

Actually I think bitcoin will be more difficult to understand for people who dont have bank accounts, since they would think that they dont really need it. I guess most of bitcoin users here are people who have bank accounts, and feel that the banks are suck with their high fees.

Purely from a technological point of view, the blockchain is extremely interesting for banks, but bitcoin itself as a currency is quite a different story, I believe.
Bitcoin as a currency poses competition for them, but with current adoption rates, I don't think they have much to fear, yet. 

Digital currency will accepted as payment methods, which is agreed by lots of companies on internet. This is a new challenge for the industry.

well the banks and everyone has seen the power of blockchain , how its transparent and also secure on the same time, bank may be threatened by bitcoin but no one in this world can deny that its tenchonlogy is really creative and powerfull so with time they have to accept it. its revolution

Banks know that they don't have the power to hold their clients accountable anymore. They know this but they can't do anything about it. They are helpless by the power of this virtual currency.

There are many smart persons who working in bank, and surely they wont be hopeless and still keep silent in this situation. I'm pretty sure they are making many strategies to solve this problem.

Banks were frightened of bitcoin more at first and they still are, its just now they mostly are seeing they cant win as such so better just to join in or copy.

in my opinion they are not frightened  they just dont want to gamble
because of price is not stable and also we cant not say that bitcoin will not last forever..

Actually I dont understand what the point from your opinion, whats going on with gambling?  :)  Its not about gambling, but it is a rivalry between decentralization thing with the centralization one  ;)