As one great philosopher once said: history is made today. Cryptocurrencies are taking up the financial stage and things are going to change dramatically. We may not realize it just yet, but as the old ways of trading and bartering have made place for the emergence of money as we know it, cryptocurrencies are the ones now in line, on a financial evolution timeline. So, are bankers afraid of Bitcoin and other cryptocurrencies?
Bankers Fear of Bitcoin: The Roots
One quick example pops up in our minds as we reply: of course they are afraid, just as people in general are afraid of AIs. This fear, though, is not caused (only) by the unknown and safety issues, but especially by the big question the Bitcoin has raised indirectly and implicitly: do people really need bankers?
Let’s explore the signs and symptoms of this bankers fear of Bitcoin by observing the big banks attitude towards cryptocurrency. With suspicion – this is how crypto world was (still) seen by the bankers at the end of 2017 and beginning of 2018.
“In terms of using Bitcoin or some of the cryptocurrencies, we are also looking at it, but I’m told the vast majority of cryptocurrencies are basically Ponzi schemes” – World Bank Group President Jim Yong Kim said at an event in Washington.
Bitcoin is a “combination of a bubble, a Ponzi scheme and an environmental disaster” – as described by Agustin Carstens, general manager for the Bank of International Settlements, at a Frankfurt University lecture.
Also, Bitcoin is “not money” and is similar to “Mr. Ponzi’s schemes” according to Yves Mersch – executive board member of European Central Bank.
Charlie Munger, the vice chairman of Berkshire Hathaway, gave an even more honest opinion and called it a “noxious poison”, according to Yahoo Finance: “I never considered for one second having anything to do with [bitcoin], I detested it the minute it had been raised. The more popular it got, the more I hated it.”
From Hate to Love, There Is Only One… Trade
Hate or fear might just stay in the way of progress. Bitcoin is more and more seen as the “people’s currency” and financiers are cosying up to cryptocurrencies. How do bankers cope with all this?
“Banks have sat on their laurels for 30 years. I just threw out my cheque book, it looks exactly the same as it did in 1985. Why should I still have it when I’m doing Uber instead of cabs, Airbnb instead of the Sheraton? They have absolutely failed to innovate in any way, shape, or form and now they’re paying the price.” – former JPMorgan trader / now cryptocurrency fund manager Daniel Masters said in an interview with Business Insider.
Daniel Masters is no exception. The biggest latest news (May 2018): Goldman Sachs has plans to become the first Wall Street bank with functional Bitcoin trading operation, as The New York Times reported. Goldman Sachs might have understood that in order to evolve, you need to adapt.
The cryptocurrency market became too large and too important to be ignored, as blockchain venture capitalist Spencer Bogart said, while explaining how other banks on Wall Street will follow Goldman Sachs example.
But can cryptocurrency replace SWIFT, the “backbone” of the international banking system, a 45-year-old program?
