Читать книгу Cryptocurrency All-in-One For Dummies - Peter Kent, Kiana Danial - Страница 174

Banking was the first industry to recognize the threat of Bitcoin and then the potential of blockchain to transform the industry. The banking sector is highly regulated, and the fees to organize and operate as a bank are expensive. These heavy regulations have been an insulating and protective shield for the whole industry, as well as a burden. The application of fast, efficient, digital money that doesn’t carry the cost of handling cash and that is traceable as it moves through the financial system was an intoxicating and threatening proposal. The idea that value can be held outside the control of central authorities also piqued the interest of financial institutions and governments that back currencies.

Initially, these financial institutions and governments tried to squelch blockchain with regulation. Today, they’re embracing blockchain through investment across the board.

In 2013 and 2014, the U.S. Securities and Exchange Commission (SEC) issued a warning to investors about the potential risks of investments involving virtual currency. The warning was that investors might be enticed with the promise of high returns and would not be skeptical enough of the new investment space that was so novel and cutting edge. According to the SEC, digital currency was one of the top ten threats to investors. Today, the SEC stands ready to engage with companies and investors as cryptocurrency gains traction within all industries.

Not even two years later, countries around the world — including the U.K., Canada, Australia, Japan, and China — began investigating into how they could create their own digital currencies, seize cryptocurrency for themselves, and put money on the blockchain. History was made in 2021 by Purpose Investments, a Canadian asset management company that launched the world’s first Bitcoin ETF (exchange-traded fund). The Purpose Bitcoin ETF further shocked the investment world by crossing the $1 billion-in-assets mark within 30 days!

Blockchain’s promise of an uncompromisable ledger has made it an appealing system for governments that are seeking to reduce fraud and improve trust. Innovations in blockchain technology promise to increase its ability to handle the billions of transactions needed to support economies, making a cryptocurrency feasible at scale.

Blockchains are in themselves permanent and unalterable records of every transaction that is inputted. Putting a country’s money supply on a blockchain controlled by a central bank would be utterly transformative because there would be a permanent record of every financial transaction, existing at some level within their blockchain records, even if the records weren’t viewable by the public. Blockchain technology and digital currencies would reduce risk and fraud and give central banks ultimate control in executing monetary policy and taxation. It would not be anonymous in the way that Bitcoin initially was. In fact, it would be quite the opposite, giving central banks a full and auditable trail of every digital transaction made by individuals and companies. This system might even allow central banks to replace commercial banks’ role in circulating money.

The question of what the future for banking will look like can be both scary and exciting. Consumers can now pay friends through their phones almost instantly in almost any type of currency or cryptocurrency. More and more retail stores have begun utilizing cryptocurrency as a way to pay for goods and accept payment from customers. In Kenya, using cryptocurrency is now the norm. But this is still not the mainstream option for most of the world. Western markets are still in the early adoption phase.

Given that most individuals have their wealth locked into legal tender issued by governments or locked into assets that are within existing government systems, fintech innovations must merge with these existing systems before the public sees the mainstream utility of blockchain or digital currencies. If regulators find ways to tax and register accounts, then mass adoption of customer-facing wallets with digitized tokens is only two or three years down the road.

The business-to-business market will start utilizing blockchain much more quickly. In fact, a production-hardened system with the associated policies and operations is now being tested. Ripple and R3, among others, have been hard at work making this possible. These systems will first focus on the institutional creation of digitized representations of deposits. These are IOUs between internal organizational departments and between trusted partners, like vendors. Regulators, central banks, and monetary authorities are all investing heavily in making this possible. Canada and Singapore are two countries that have been moving very quickly in this direction.

Know your customer (KYC) and anti-money-laundering (AML) regulations require banks to know who they’re doing business with and to ensure that they’re not participating in money laundering or terrorism. Banks issuing cryptocurrencies still have significant challenges to overcome. In order to stay compliant with KYC and AML regulations, they need to know the identity of all the individuals utilizing their currency. In many cases, people’s bank accounts are already offering debit and credit service transactions, like distributed ledgers in blockchains. The first candidates in this area are going to be regions where regulators, banks, and central banks work together. Singapore and Dubai are good candidates that already have blockchain initiatives: Singapore used blockchain technology to verify COVID-19 test results, and the UAE government launched the Emirates Blockchain Strategy in 2021, aiming to transform 50 percent of government transactions into the blockchain.