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Posted: 3/7/2018 - 2 comment(s) [ Comment ] - 0 trackback(s) [ Trackback ]

Bitcoin Could Replace Banks

Benjamin Netanyahu, Israel's Prime Minister, on December 12, openly commented through a YouTube video on the future of banking. According to him, he believes that blockchain technology would overthrow banks by replacing traditional banking due to the growth in bitcoin's price experienced this year. The head of state also spoke his thought on how a bank is more of a middleman, protecting their customers by offsetting risks and preventing theft. He also talked about blockchain being a decentralized alternative to current centralized banking system, performing everything a bank can do, but without the need for an inefficient central institution that takes a transaction cut every time. The truth behind what I just said is what's propelling bitcoin upwards” said the Prime Minister.

Bitcoin is not money in and of itself. The bitcoin price is essentially the price of transferring already existent fiat currency or, in another sense, it is simply a non-binding claim” to standard money. Since the value of bitcoins are not in their usage as standard money but in their usage in transactions, bitcoins are only as good as the fiat currencies in which they can be sold.

Well, I don't think that is true. No, not because the PM of Israel isn't an expert on cryptocurrency. But because nothing is ever going to replace the banking system. We will always need them. Bitcoin is a complex phenomenal that is mostly understood by the upward mobile youth and tech guys. Banks are understood and used by both the old and the young.

While the Israeli prime minister does not delve into details, it may be that Netanyahu is hinting toward the fact that digital currencies underpinned by blockchain technology are trustless and decentralized in nature, providing secure and direct transactions between parties (cutting out the need for middlemen), and ensuring anonymity - all features that the traditional banking system lacks.

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