Bitcoin Forum

How to connect cryptocurrencies to banks?


Recently, more and more articles and information about cryptocurrency have appeared
on the Internet and in the press.
We are told about its advantages, properties, usability.
Nevertheless, the cryptocurrency is almost never used as a payment.
Banks and payment systems are in no hurry to use cryptocurrency.

Let's see how the banks and the SWIFT system interact:

https://zenith.0xbt.net/W.png (https://zenith.0xbt.net/W.png)
Used diagram by John Hemminger from the Chelsea AllIson
article: “What is SWIFT?” (https://fin.plaid.com/articles/what-is-swift)

It seems that everything is simple, everything is verified, it is possible to carry
out the movement of cryptocurrency.

So why is this not happening?
What prevents cryptocurrency to be used as a means of payment?

When we come to the bank and replenish our account or transfer money using credit cards,
the person verification procedure is carried out.
And it turns out that anonymity, which is considered one of the main advantages of
cryptocurrency, in this case is its disadvantage.
Anonymity becomes an obstacle to legal cash flow.

Let's take a look at the revised scheme:

https://zenith.0xbt.net/W-3.jpg (https://zenith.0xbt.net/W-3.jpg)

How do we solve this problem?
In addition, there are many different cryptocurrencies that have their own blockchain.
That is, we need to develop a single algorithm for existing cryptocurrencies.

We define questions to solve our problem:
1. Anonymity.
2. Single algorithm.

- Let's start with the second question.
At this stage of development, it became possible to use cryptocurrency from various
blockchains in the Ethereum network.
To do this, you need to create a wrapped version of the cryptocurrency in the form of "ERC" token.
There are already options such as WETH (https://weth.io/), WBCH (https://etherscan.io/token/0x286748CAE9eE8f98A399032Cf45cbBaD8dE3cb8a) and WBTC (https://www.wbtc.network/).
We see the possibility of bringing cryptocurrency to a single standard.

- First question.
To solve this problem, we used the standard ERC functions of tokens and added a new function
to the smart contract, with which you can sign a transaction or add the necessary information
to it for any existing ERC token with these properties.
That is, we solve the problem of checking the movement of funds by creating a kind of
gateway in the form of a “ZENITH protocol” (http://zenith.0xbt.net/) to solve it.

Now let's take a look at the obtained solution of the tasks in the form of a schematic image:

https://zenith.0xbt.net/W-6.jpg (https://zenith.0xbt.net/W-6.jpg)

We have proposed one of the possible options in order to legalize cryptocurrency.

Our smart contract “ZENITH protocol” (https://etherscan.io/address/0x8C1ec84943CF6D70E2C92Ec81f1cbC320D5Cd2a8)

WebSite (https://zenith.0xbt.net/)
Medium (https://medium.com/@zenithprotocol/how-to-integrate-cryptocurrency-in-the-banking-sector-a84851557ef)

Thanks

the only way banks ever want to get crypto connected to them is by simply creating their own coin to take goods and services from the economy.

regards

There are already rumors that bitcoins were created by the Bank which I doubt though. You know, rumors are rumors. You do not want to waster your energy there.

these damn rumors are useless trash, banks researched on IT transfer of encripted money since decades, and improved that technology

banks dont love getting the financial system that made them kings in their state being destroyed before their eyes.

i however am happy that i dont have to argue around with them anymore

You don't. It's not going to work. The banking system and cryptocurrencies are contradictive to each other when it comes to the fees, anonymity/privacy, security etc.

It might work in the short term like with debit cards that use crypto etc. but for the long term, It's not helping and will eventually fail.

at1. There is this old saying, "registration is the first step to confiscation"
       The moment we loose anonymity factor, will be our last. There will be nothing that could stop them.
       What was electronically given, can be physically taken away because nothing is secret. We saw just that already.  
at2. No one can force people to leave btc blockchain behind and use some other instead.
       Voluntary switch could happen only if the technology offered, display tremendous improvement (still doubtful)
       in all aspects (look above). Such loop simply can not be broken, sooner delegitimization brings the market down.  

Nevertheless nice post, professionally presented.

1. Of course, the cryptocurrency anonymity is a great advantage.
But lately we have been witnessing a tightening of tracking cash flows.
And I would not be surprised if in the near future large cryptocurrency exchanges require confirmed cryptocurrency transfers, that is, signed ones.
So I think we will come to this sooner or later.
2. At this stage there is no better alternative for introducing a single standard than Ethereum wrapped tokens.
Perhaps soon we will see other options, but so far this is not.

Of course, such a future is not very pleasant for us.
And yet we must accept what is happening.

Are you saying in the future we'll probably see each time we make a crypto transaction from an exchange we need to sign papers via DocuSign or something like that?

Wow, will it is definitely possible, I doubt users would love that. A better alternative would be to record special words or key in order to make a withdrawal, 2fa and something like that. It's quicker and safer than signing papers.

The question should be: who wants this. As a BTC user, I don't. I'm very satisfied with banks and exchanges as they are. My only hope would be to see shops, real brick and mortar stores, buying and selling BTC a bit like silver coins or gold.

No one is interested in our desires. Therefore, we must prepare for the worst.
And when this future comes, it is better to be ready.

Isn't it something XRP does? Not a fan of them, just heard.

Banks will exists and will functions as they are meant to be in a traditional way only and if any so their could be new crypto banks in some countries who have made it legalized in their country. Also one should be focusin on how can btc be used in our daily life.

I really don't think that you will really solve something here. 3rd party wallets already have ways to convert your cryptocurrencies to cash via bank deposits, e-commerce websites also use payment processors such as Bitpay and Coinbase Commerce to make it possible for your customers to pay in crypto which these payment processors would also handle the conversion of it via bank deposit as well. With the process you have given it will only complicate things for something that is already been solved by a lot of wallet and payment processor services.

Perhaps, as long as cryptocurrencies are not recognized as a payment
instrument and do not have legal status, this is not required at this stage.
Processing services work with a limited number of cryptocurrencies.
But if we consider an increasingly stringent policy regarding the legal use of
cryptocurrencies, then most likely we will soon come to this.
This same protocol allows you to sign transactions and thereby legally enter
other coins from the Ethereum network.
And here, a single strategy was developed to solve this problem.
The CFTC (https://www.cftc.gov/LawRegulation/FederalRegister/final-rules/2018-27167.html) is also interested in deciding how to use Ethereum and its derivatives
legally as a payment instrument(request (https://www.cftc.gov/LawRegulation/FederalRegister/final-rules/2018-27167.html), comments (https://comments.cftc.gov/PublicComments/CommentList.aspx?id=2941&ctl00_ctl00_cphContentMain_MainContent_gvCommentListChangePage=2_50)):


So the "Zenith Protocol" is aimed at solving the legal issue of legalizing
cryptocurrency, which sooner or later will have to be resolved.

“ZENITH protocol”
https://zenith.0xbt.net/zenith-1.png (https://zenith.0xbt.net)

“ZENITH Protocol” Smart Contract:

* Main Ethereum Network (https://etherscan.io/address/0x8c1ec84943cf6d70e2c92ec81f1cbc320d5cd2a8)

* Rinkeby Test Network (https://rinkeby.etherscan.io/address/0x73867dac15fb320fbc7290d9210a47108a4ca260)

Actually,in the Philippines has bank launch their bitcoin ATM machine and not only in the Philippines, I heard also in europe,Venezuela and soon all over the world..but if the bank have own cryptocoin is much better
Soon we don't need paper money,at the next generation.. Digital money like cryptocurrency is good for the future..

Yeah, but it's local to the Philippines, that go thing about those Bitcoin ATM in the country is that it is back by one of the largest which is UnionBank so it's a welcoming news. But for other countries a complete handshake is very different because we all know that banks is very afraid of crypto but for me it's a long way to go before we can actually connect crypto to banks. Not impossible but it will take years before both of them will have some sort of agreement.

Is this thread mainly about advertising your ^proposal^ or what?
Anyways, banks and crypto? Seriously?
I've never thought such combination would be possible (at least they won't give crypto the degree of being a currency). Banks are allergic to crypto, they will show that they're supporting but they will accumulate just in order to throw this thing out of the reach of common people, as who would like to lose the pre-dominancy they've gained since ages. The power, the control over a country's finance makes banks very very strong in their genre and they'd never want to lose it to cryptocurrencies.

Honestly I don't understand why would you want to do that since the banking system is totally different from cryptocurrencies and they are not going to work well together. Banks are against that since they are constantly launching accusations and threats against bitcoin, and probably also cryptocurrencies users are against that since they moved from banks to cryptocurrencies.

Only banks never used cryptocurrency as payment. Because they hate cryptos. People and believers around cryptocurrency are using it to pay for goods and items they want. Some restaurants and institutions are accepting cryptocurrency as payment in exchange for their service and stuffs. Those banks see cryptocurrency as worthless, valueless code that's why they are not believers. Perhaps, they will create their own code or coin and charge how much the clients will pay for the transfer code of that payment with charge. Isn't it the idea?

Six international banks have just signed letters of intent to issue stablecoins, or tokens backed by fiat currency, on World Wire, an IBM payment network that uses the Stellar public blockchain.

When cryptocurrencies will be used by people, not by robots and soft, then it will become connected to banks

You have already lost the race, before you even started. The Ripple guys have been sucking Bank dicks for some time now and they totally abandoned anonymity for that purpose and still failed.  ;D

Mike Hearn, working for the R3 consortium of Banks are pushing for the same thing with Corda and he is already looking through his ankles to get this spot. <Swift replacement>  ::)

No, this is different.
Usually, developers try to find a solution only for their coins.
And it looks like an attempt to find a common solution for most cryptocurrencies.
And the more options there are, the better for us. So let them try.  8)

Banks and cryptocurrencies

Today, some processing services are trying to use a limited number of cryptocurrencies
as a payment tool.
But the banking sector is not in a hurry to join the use of cryptocurrency.

Why it happens?

The fact is that for a bank to use cryptocurrency, in contrast to the processing service,
you need to take it to your balance. That is, the cryptocurrency should be on the balance
sheet of the bank as a deposit.

As we know, any banking transaction is signed and identified.
Since cryptocurrencies have the property of anonymity, therefore the bank cannot accept
cryptocurrency on its balance sheet.
And we see something like this:

https://zenith.0xbt.net/b2-111.png (https://medium.com/@zenithprotocol/banks-and-cryptocurrencies-31f49dd03e9f)

How can this problem be solved?

Suppose that there is a way to sign transactions in a cryptocurrency:
1. The user sends the cryptocurrency to the address of the bank, signs the transaction
with his identification key, which the bank has given him.
2. The bank goes to certify this transaction and credits the cryptocurrency to the deposit
account of the client.

In this example, we see a variant of legal transfer of cryptocurrency to a bank deposit.
To implement such a solution, it is necessary to implement a single strategy for all
cryptocurrencies.
At the moment, in the network “Ethereum” in the form of “ERC” coins there are stable
coins that are already successfully used by processing services, as well as wrapped
tokens there are cryptocurrencies such as “BTC”, “BCH”.
Most likely in the near future we will see other cryptocurrencies in the form of ERC
wrapped tokens.
To solve this problem, we use the “ZENITH Protocol”, with the help of which it is possible
to sign transactions of any “ERC” coins.
 
And we get the following result:

https://zenith.0xbt.net/b3-111.png (https://medium.com/@zenithprotocol/banks-and-cryptocurrencies-31f49dd03e9f)

Examples of transactions signed by our smart contract:
https://etherscan.io/tx/0xd51dc7bf84392fbf3416496e2232f228c596cd5c4297293c7382b1b33692ec2e  | DAI
https://etherscan.io/tx/0x6ca0a8fd92c9064abe91b6a7763f54b91cb8a3b114ada62460dc60ede3af5586  | USDC
https://etherscan.io/tx/0xea1d6de7e7c909d57a223b1a7f9c2274100c0e45ad57320ced873832c1772f2e | WBTC
https://etherscan.io/tx/0x8ed657dac3a6ba15c51d6f08631797a5a0ab9693c7e388bdcf788152378c64f6  | TUSD


«ZENITH Protocol» (https://zenith.0xbt.net)

Medium (https://medium.com/@zenithprotocol/banks-and-cryptocurrencies-31f49dd03e9f)

Thanks

every cryptocurrency developer has used several methods which of course can be linked to banks in every transaction, one of which is to make coins stable, and if synchronization between banks and cryptocurrency occurs and is efficient then of course it will be a reference and consideration for other banks throughout the country follow it

However, cryptocurrency couls be integrated by these banks but it will create more transaction fees as bank do not accept crypto. So, instead of receiving crypto the banks will going to convert that one into fiat using their own crypto wallet to fiat wallet or an exchange. This may be costly and the service would not be necessary but therr are things that we just need to accept the service especially if it urgent and involves huge money.

I think banks will.be useful but not for storing crypto but instead for storing fiat money ready ro be processed and converted to crypto in their own exchange.