Popularity of Bitcoins“Bitcoin is fraud,” claimed JP Morgan Chase CEO Jamie Dimon (he has since regretted calling it a fraud though his stance on the cryptocurrency hasn’t changed). Warren Buffet the investment legend and the CEO of Berkshire Hathaway have stated that cryptocurrencies will have a bad ending. Now, if you have invested in bitcoins you will be jittery because currently, bitcoin is tumbling down at a rapid rate. To add to the investors’ woes banks have started banning the use of credit cards to buy bitcoins.

Filing the mandatory 10K with the U.S. Securities and Exchange Commission the Bank of America has stated that cryptocurrencies are posing a threat to the bank’s business. The bank said that cryptocurrencies will “negatively affect our earnings” as their clients’ will turn to them for businesses which the bank deems risky.

Furthermore embracing a new technology was a costly affair. It is not just the Bank of America but also the Citigroup and JP Morgan Chase that have banned the use of credit card for the purchase of bitcoin. So, what are banks afraid of?

The blockchain mechanism

One of the major reasons that banks are up in arms against bitcoin and other alternative currencies is the use of the blockchain which eliminates the need for middleman which includes banks in all kinds of transactions.

Central banks control the money in circulation and this helps regulate the economy, the job scenario, inflation, and recession. But if Bitcoin is to gain popularity this control over the currency will vanish which can have detrimental effects on the financial state of a country according to the Banks. It, therefore, comes as no surprise that the BofA CEO Brian Moynihan’s claims that banks are safer than bitcoin. Carstens, the former governor of Mexico’s central bank echoes the sentiment that cryptocurrencies are unsafe and can be used for money laundering and criminal financing purposes.This is not true as we shall soon see.

Finally, banks generate a lot of revenue from the fees they collect. There are several jobs at stake in the banking industry which can disappear if virtual banking takes over. There will be no need for foreign exchanges like Western Union and other money transfer institutions.

Limitless trade

At present, the banking system is failing and there is rampant corruption in comparison the ability to manipulate the blockchain is negligible at present. Hence, if the cryptocurrency becomes legal the entire banking system becomes null and void and the system will not be able to play around with the cash inflow into the society and control the economy.

Good To Know:

You can use cryptocurrency trading software without any trading knowledge.

The central banks believe that the lack of regulation will lead to criminal financing but if the law enforcement agencies know how to search they can find the trace of illegal transactions because bitcoin is like your subconscious mind that records everything, it just depends on what you want and how you search for it. After busting the famed Silk Road where drugs worth $ 1 million were illegally traded, FBI Assistant General Counsel Brett Nigh said, “investigators can follow the money.”

Conclusion

Virtual banking is a reality that banks can’t deny; at the most, they can delay it and that is what they are trying at the moment. We are at the frontiers of a new age where paperless currency may become a reality sooner than thought.