Do we really need cryptocurrency in the world?

With the hype of bitcoin 18 months ago where you couldn’t listen to any business news or read any newspaper without Bitcoin being mentioned that lead to the price increase. Everyone then invested it being the next big thing. Now it has cooled off, not so many people seem that excited about it and people have gone off the idea of investing in Bitcoin (or any crypto-currencies), while I wouldn’t recommend as a pure investment, I do believe the banking industry needs to change and why specifically blockchain might be an answer they are looking for.

Picture this example, when you go abroad what happens when you want to transfer money, you go to the bank and withdraw it at the ATM. You are faced with fees and a bad exchange rate at best (some of the Fintech banks are trying to change this), however, people have just accepted this, kind of like the way they accepted the best way to search for something in the mid-80s was books. This changed rapidly when the internet came, we adapted.

Click for bitcoin to euro

 instant exchange

The Banks make a vast majority of their money from those ATM fees and awful exchange rates when abroad. I would imagine even a modest traveler would incur 100’s of dollars worth of fees each year, for a business individual I expect it to be 1000’s and for frequent business travelers 10,000’s and we just accept this as the way it works. We can get travel cards with better exchange rates and credit cards that have minimal charges for spending abroad, however, we are still paying for transacting money from one account to another.

Unified Currency

How does a unified currency help, if you were going from London to Frankfurt, then to Hong Kong (a frequent route for most international Bankers) you would need to exchange into three different currencies (GBP, EURO & HKD). That currency change is affected by fiscal policy, macroeconomic factors, and interest rates. There are ways to profit from this even in commercial use from a carry on trade. However, what if you didn’t need to change the currency or make an exchange, what if you could go to a Starbucks in Hong Kong, buy it with Bitcoin, fly to Singapore the same day and go to your favorite restaurant and buy your favorite meal the same currency.

What Does It Need To Happen?

It needs a few things, one is the age of digital money and companies using it as well as individuals. This trend is happening somewhat with Apple pay, but its too commonly used as Wechat and Alipay in China, here is a perfect example of how Fintech can do this on a global scale. Everything in China from the Markets to beggers uses Wechat, it has become a near cashless nation (yes I have seen beggars not accepting cash) with this it forces people to use cashless options which the banks can’t provide. This then means more and more people are adopting WeChat as a payment method and less cashing forcing the banks to change from cash. This could happen with a world currency with the rise of Fintech and the technology of blockchain.

Why Would It Be Helpful?

Like mentioned before it can reduce the fees on the number of currency transactions if it uses a blockchain; it is safe. With the Singapore government now implementing blockchain in its trading, it can be traced unlike physical cash, or electronic transactions and have seen this with people buying houses with Bitcoin. It doesn’t get eroded by debt, a central bank, when it prints more money, decreases the value of the money and uses this as a key stimulant of fiscal policy to stimulate an economy. With most western countries having a 2% level of inflation, the purchasing power and your money in the bank are worth less each year by around 2%. With a crypto-currency, there is only a set amount built and unlike other money, it is not controlled by the central bank so it will not be reduced by inflation from debt.

Should I Buy Bitcoin?

I don’t know what crypto-currency will take off or whether to buy any of them, however, what is for sure is that the present banking system is flawed. Changes could be implemented to make it more efficient in safety, fees, and inflation. Although, I wouldn’t say invest in anything specific I would say embrace the blockchain ideology and how it could disrupt modern-day banking.

Currently, we are seeing a lot of platforms being started, such as Tide, Monzo, and Starling which offer greater banking power and technology from your phone, for both business and personal finances. They allow you to categorize spending, pay someone via a link they send you, more options in apps, more add sons, and the best of all, a lot less hassle. We are seeing a change in the banking industry and we think blockchain plus a crypto-currency changing how it all operates in the future.