Banks VS Cryptocurrency: The revolution is canceled

There is an opinion among crypto enthusiasts and cryptocurrency developers that the emergence of blockchain will become a gravestone on the banking system. Is this really true?

Fashionable and loud statements are one thing, but the harsh reality and history of the development of the financial system is another thing. In our series of articles, we examined in some detail the history of the emergence of money, which is now commonly called fiat, the development of the banking system, and, most importantly, the role of banks in the modern world. 

And, upon deep study of the issue, it becomes obvious that the banking system is not in serious danger. Well, at least she's not in danger of disappearing. 

First, let's look at why cryptocurrencies were created and what the main function was assigned to the blockchain by its creators. 

Bitcoin was originally developed as a model of cash in a virtual digital space. At its core, mining is not intended to create new coins, and rewards are, for the most part, a side function. The main task of miners is to eliminate the possibility of transferring the same funds twice to different users. 

For the rest, the transfer of cryptocurrency coins from one person to another, that is, in essence, the assignment of debt obligations is the main and practically the only function of cryptocurrencies. 

Smart contracts, first implemented on the Ethereum network, today are nothing more than technical infrastructure and have nothing to do with legal contracts. So their impact on the financial system is not that great. But, as we now know from our article BANKS. HISTORY OF CREATION. BASIC FUNCTIONSThe tasks of banks go far beyond the simple transfer of funds from one person or organization to another. 

There is also storage (deposits), lending, bank guarantees - a whole range of services that are not possible to cover with a decentralized system based solely on blockchain. 

With the cryptocurrencies themselves, everything is also not so rosy. Of course, we can say that “our funds are not stored centrally”... But tell me (if you use, say, bitcoin) - do you store a copy of the blockchain on your device? Unlikely, and not very effective. This means you will have to use third-party services to one degree or another... 

And many users who are not experienced in technical magic even use online storage facilities like bitgo, blockchain.info or the like. And they sincerely believe that they receive all the benefits of bitcoin... Although, if you look at it, any online wallet has already become the very centralized storage, the very bank where clients store their savings. For convenience, hoping for security, but not at all on your computer or phone.

Hardware wallets, with their great potential reliability, also rely on the work of third-party services of their manufacturers - both Trezor and KeepKey work through the servers of the manufacturers' companies. And if such a service suddenly disappears from the internet, you will lose access to your savings. 

So, it turns out bitcoin and cryptocurrencies are not needed? 

Not at all. And they have and will continue to have a significant impact on the banking environment. However, cryptocurrencies are not killers of banks and the financial system. But only logical and completely timely development.

As in nature, in the world of technology the emergence of new species does not destroy the ecosystem at all, but only modifies it, making it more diverse and sustainable. 

If blockchain technology successfully gets rid of childhood illnesses, then it could become a successful addition to the modern financial system, and ultimately we will all benefit from it.