It is 2022 and the banks and the traditional banking system are still alive despite decades of threatening predictions made by crypto enthusiasts. The Only Endgame That Happened is a new Ethereum 2.0 roadmap published by Vitalik Buterin late last year.
Despite this roadmap, the crypto industry will change for the better, 2021 shows us that crypto has not destroyed or damaged central banks as much as traditional banks have not killed crypto. To what?
To be honest, the fight between them was brutal on both sides. Many crypto enthusiasts are screaming about the coming apocalypse of global financial systems and describe a bright future for cryptocurrencies in a future where every item can be bought with bitcoins (BTC). On the other hand, bankers have been quick to defend the traditional role of the banking system, blaming blockchain technology for inefficiency and non-compliance.
Both sides erred in their predictions.
Fortunately, neither cryptocurrency nor traditional banking was destroyed, despite their wishes. On the other hand, none of the major crypto projects has moved away from the closest integration with banks. The US-based cryptocurrency exchange Kraken has received a banking license and Coinbase’s IPO process speaks for itself as it is 100% a game according to the rules of the banking / finance system. Most large projects use the services of only a few banks: Signature, SilverGate and Bank Frick – with a focus on calculations and compliance with banking principles for working with cryptocurrencies.
On the other hand, the banking community has created internal ecosystems for crypto projects. Visa offers cryptocurrency advisory services to help partners navigate the world of cryptocurrency. Amazon Web Services (AWS) wants to be “AWS for Encryption”. Switzerland offers banking services for working with cryptocurrencies. SolarisBank also offers an API for crypto projects. The largest US banks and stock exchanges are launching cryptocurrency-related services. In El Salvador, bitcoin is recognized as a means of payment, which means (in theory) that international financial institutions should be prepared to settle bitcoin with El Salvador.
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What prevented cryptocurrencies from destroying banks?
Humanity. Throughout human history, many new technologies can not be insured against direct or indirect control by public authorities through companies. Radio, TV, Internet, social networks – they all started with the idea of free flow of information, and finally met the reality with total control. The same story is happening now with the blockchain, and there is no chance that it will change in the future.
For the most part, people try to exaggerate the risk and reduce the likelihood of a good outcome. In my opinion, this is the reason that is severely limited and still prevents people from accepting cryptocurrencies. But as I said, this way of thinking is part of human nature.
But why does centralization win over decentralization? It took some time for the world government to realize that blockchain technology can not only be a problem, but also a powerful tool for advancing political interests. So the blockchain, originally thought of as a powerful tool for freedom, has been completely reversed, becoming a money management tool on a scale previously unthinkable. As a nuclear technology, people use it for both peaceful and military purposes; Blockchain contains two sides of good and evil.
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Although it is not a loss
At first glance, the cryptocurrency had to retreat from its original positions to the hawks. For her part, she received widespread recognition, distribution and a large number of users around the world – this seems to be a fair reward and a victory over those who predicted her imminent death.
I believe that the significant growth of technology related to Regtech, designed to accelerate compliance processes and all possible verifications, has led to the adoption of cryptocurrencies through traditional finance. These projects, with their Know Your Customer (KYC) / Anti-Money Laundering (AML) solutions, demonstrated the cryptographic response of banks: Companies like Chainalysis and Onfido can make KYC processes more efficient while maintaining full process legitimacy.
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Newly established start-ups have not been able to follow the path of low-performance banking compliance, which is an interruption in almost every process. However, in order to conduct business in the legal field, they carried out compliance on their own, but more efficiently.