Bitcoin Bank

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Bitcoin Bank 2018-05-22T15:04:24+00:00
Bitcoin Bank

Bitcoin and Banks

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  1. What is the difference between Bitcoin and banks?
  2. What do banks think of Bitcoin?
  3. Bitcoin Friendly Banks in the US
  4. Bitcoin bank account
  5. Buying Bitcoins with bank transfers

Banking systems, all over the world, have controlled the loanable funds market, volatility of a currency, the money supply, inflation and the list can go on and on. These usually result in a number of regulations and expenses on society, because of which people have always wanted to be somehow independent of these frames set by certain systems. In 2009, the founder(s) of Bitcoin managed to come up with an idea that could give people the freedom they wanted, drastic reduction of fees that people have paid to banks for ages, as well as by making transactions as fast as a few seconds.

Bitcoin banks.

Bitcoin was created as a cryptocurrency by an entity, which is recognized as Satoshi Nakamoto.

  • In contrast to the centralized traditional systems, such as banking, which is in charge of issuing a certain currency, Bitcoin has a decentralized, peer-to-peer system and anyone including you can be involved in the process of issuing Bitcoins.
  • Bitcoin allows two parties to exchange value virtually without any loss of value or having to pay a third party.
  • There is no need for centralized control for transactions with Bitcoins and people can exchange goods and services within milliseconds.

What is the difference between Bitcoin and banks?

Bitcoins and banks are fundamentally different from one another.

  • Bitcoins, just like commodity money, have a finite supply.
  • The supply of the Bitcoins are blocks with complex algorithms, which have to be solved, and when they are – the reward is a certain amount of Bitcoins.
  • The process is known as mining and the people who do it are the miners.
  • The price of the Bitcoins is usually decided by the supply and the demand of this currency, and it goes up as the algorithms are harder to solve and there are tons of people who want to become a Bitcoin owner.

When someone says banks vs Bitcoins or Bitcoins vs banks, people often associate it with the end of the banking system, however, Bitcoin is a creator of new markets. It is not a threat but an opportunity to the banking system. The application of blockchain into banking system could solve tons of problems for them too and reduce many costs. Here are some of the features of blockchain that banks use and are much better off thanks to those.

  • Clearing and settlement.
Banking system Blockchain
Clearing is the update of the accounts of the trading entities along with making arrangement for given transactions and securities.

The settlement is the exchange of money for securities.

These processes cost millions of dollars to the banks.

Accenture research has shown that even large banks may save several billion thanks to blockchain technology, which will also improve the productivity while clearing and settlement.

The majority of post-trade clearing and settlement will be done by blockchain.

  • Payments
Banking system Blockchain
A number of Central Banks around the world are trying to substitute some segments of their payment system. For instance, UBS in Switzerland is using “utility settlement coin” to create cryptocurrency, which can be converted into cash deposits at Central Banks.
  • Loans
Banking system Blockchain
For instance, syndicated loans may take around a month until the transaction is done. A bright example of a success story, in this case, may be Credit Suisse, which has put a syndicated loan system on a blockchain. The blockchain managed to improve the service lifecycle a lot.

What do banks think of Bitcoin?

 By the end of 2017, when Bitcoin prices rose up dramatically, it made some big players worry. Soon, China has forbidden Bitcoins; several huge corporations like JP Morgan and some others talked of Bitcoin negatively, and all of these somehow caused public panic. So, here is what worries some of the banks and governments:

  • Bitcoins are anonymous and decentralized.
  • There is no need for a third party (e.g. banks) for making transactions.
  • There are no extra costs for Bitcoin users.
  • As it is more attractive to people, it is becoming a competitor of the current banking system.
  • As a competitor, it will decrease the profits banks generate (e.g. from transaction fees etc.)
  • The governments do not like the idea of letting people alone, with no regulations.

However, despite all these fears and fights against the revolutionary cryptocurrency, there are some smart players. Due to realization and acceptance of the tech-revolution, Bitcoin-friendly banks are getting more and more common during the time. For instance, currently, many Bitcoin exchange platforms enable people buying Bitcoin with a bank account as the method of payment. Despite, the rumors and the so-called “stereotype” that Bitcoin and other cryptocurrencies are a threat to banks, as you saw (from the tables above) these two might also have a great collaboration and benefit one another a lot.

Now let us see what some of the biggest banks around the world have to say about Bitcoins:

Commonwealth Bank of Australia

Australia is a country where Bitcoins are not only legal but also rather common. Here is the position of a well-known Australian bank about Bitcoin.

  • The Commonwealth Bank can refuse an application for international money transfer if it is used for facilitating payments with Bitcoins or other virtual currencies.
  • A representative of the Commonwealth Bank once said during an interview, that the bank is encouraging innovations in the financial system; however, the bank does not use any virtual currencies.
  • They claim that Bitcoins do not meet the standards of regulations and reliability like other currencies do.
  • The customers can deal with Bitcoins if it complies with the bank’s terms, conditions, and the legal system.

 

Bank of America

Bank of America has been supportive of Bitcoins. Many Bitcoin exchange platforms have been collaborating with Bank of America for bank transfers while selling/buying BTC. However, a few days ago the bank stopped allowing deals with Bitcoins.

  • Before the ban, clients of the bank could buy Bitcoins Investment Trust and trade Bitcoins.
  • Now, the clients who have investments in the Bitcoins Investment Trust can keep those.
  • The clients who have fee-based accounts will need to sell the holdings.

Bank of England

The well-known bank has been making considerations whether to issue own Bitcoin-like cryptocurrency or not and currently, it is conducting researches for its final decision.

  • If Bank of England Bitcoin-like digital currency is approved, this will let English and the Central Bank hold virtual currencies.
  • Bank of England does not view Bitcoin as a risk for the financial system.
  • Currently, it provides banks with electronic accounts, however, the Central Bank issues money in a physical form.
  • In case of issuing digital currency, the people would be able to store the value as well as make payments in the digital currency, besides for cash.

Deutsche Bank

A well-known German Bank was not indifferent to Bitcoins and other cryptocurrencies too, so here is what they think of Bitcoins:

  • Deutsche Bank Bitcoin relationship is getting to worse, as the bank recently stated that the decrease in Bitcoin prices would be a risk to broad markets in 2018.
  • They think that because Bitcoin holders are around the globe the potential crash will be worldwide too.
  • They claim that the problem with Bitcoin is not only the price but also the exaggerated assessment in the overall economy.

Simple Bank

The American bank known as Simple Bank, based in Oregon is one of the most Bitcoin-friendly banks.

  • It collaborates with numerous Bitcoin exchange websites.
  • It allows people to make bank transactions for buy-sell processes of Bitcoins.
  • Simple Bank Bitcoin relationship has been good since the early years of Bitcoin’s development.

Bank Frick

Bank Frick is a bank from Liechtenstein and it appears to be the groundbreaker as it’s the first bank ever that allows making direct investments through cryptocurrencies. Along with the great opportunity, the bank also ensures its customers with protection from potential hackers through cold storage wallets.

  • Frick allows trading with five digital currencies that include Bitcoin Cash, Bitcoin, Litecoin, Ripple, and Ether.
  • According to the news that came out on February 28, 2018, with this action Bank Frick wants to give crypto-banking opportunities to get to the same level with the traditional banking.
  • his event has brought the Bitcoin and bank relationship on a new level and as a result, some Swiss such as Vontobel, Leonteq, Swissquote, Cornerbank, Falcon, IG Bank and Cornerbank start considering to make similar offers too.

Bitcoin Friendly Banks in the US

Some US-based banks have a tough stance against banks and won’t allow any kind of bitcoins transactions for their customers. But surprisingly, there are lots of bitcoin-friendly banks that have no problems whatsoever with bitcoin. If your bank just warned you about making a bitcoin payment or if you are worried your bank may shut down your account, here are the best bitcoin-friendly banks in the US.

One of the most US-friendly bitcoin banks is Bank of America. In spite of any claims the company may have made in the past about bitcoins, Bank of America customers admit to making bitcoin payment easily and with no restrictions. Chase bank is also bitcoin-friendly, especially for ACH transfers. Citigroup and Wells Fargo also have good relationships with bitcoin traders in the US.

From time to time, Citigroup, Chase, and BofA have halted bitcoin payments using credit cards, but wire transfers have always worked fine. The biggest issue with banks in the US so far has been about trading suspiciously large amounts of bitcoins. While Bank of American completes ACH payments to bitcoin users, for example, it becomes wary when you suddenly receive lots of funds from a bitcoin company.

Fortunately, credit union has also been very supportive of bitcoin payments for the most part as well. The Internet Archive Credit Union, for example, has even made headlines after accepting bitcoin traders who had been rejected by other banks.

BREAKING NEWS: Bitcoin and Banks in Canada Have Troubles with Getting Along

April 11th, 2018The Bitcoin and banks relationships get tense in case of the Bank of Montreal (BMO) in Canada. BMO has put restrictions on the customers who make transactions with cryptocurrencies. Recently, BMO has blocked the merchant transactions with digital currencies through debit cards, credit cards, as well as Interac Online.

This decision leads to further bitcoin and banks conflicts within other Canadian banks too, such as Toronto-Dominion Bank. TD Bank has stopped letting people buy cryptocurrencies with their credit cards. Other banks such as the Royal Bank of Canada, Bank of Nova Scotia and some others are currently reviewing their policies and send out notices to the current customers.

BREAKING NEWS: Pakistan is Joining the Cryptocurrency Ban Party

April 13th, 2018The cryptocurrency and Pakistan bank relationships aren’t doing very well. The State Bank of Pakistan claims that cryptocurrencies are supporting illegal activities such as terrorism, drug dealing, thefts and many other fraudulent initiatives.

For this reason, the Pakistani financial services that support cryptocurrencies are banned to do so from now. The ban refers to both domestic and international transactions, payments, and transfers with cryptocurrencies. Even though there’re a number of safe cryptocurrencies, Pakistan has banned them all. The State Bank of Pakistan has expressed its negative opinion about cryptocurrencies via its Twitter account. Interestingly enough, Pakistan banned cryptocurrencies right after India did.

BREAKING NEWS: The Central Bank of Kenya is Unhappy with Cryptocurrencies

April 16th, 2018The cryptocurrency ban continues as the wave reaches all the way to Kenya. After the warning against Bitcoins back in 2015, the Central Bank of Kenya aka CBK has warned the private and public banks of the country to watch out for crypto deals.

CBK Governor Patrick Njoroge expresses his concerns regarding the Bitcoin bank relationship, as he, along with his team, thinks that the decentralization and the anonymity of the overall system are favorable for frauds, thefts and a number of other illegal actions. Njoroge looks at this sphere as a threat to the finance world rather than an opportunity.

Bitcoin bank account

When it comes to bank account Bitcoin is working quietly different. Many people often confuse Bitcoin wallets with some kind of bank account. However, these are completely different things. Bitcoin wallets usually come in different forms: hardware, software, and online wallets. Despite their different features, all the wallets allow users to store and exchange Bitcoins. Here are the pros and cons of these wallets:

Software Wallets

Software wallets are hot wallets and users need to download them in form of a software into the user’s laptop, iOS or Android device.

Pros:

  • Very handy.
  • Easy to use.
  • The wallets are available all the time.

Cons:

  • The wallets can be hacked as they work online.
  • If something happens to the device, the coins will be lost.

Hardware wallets

Hardware wallets are classified as cold storage wallets:

Pros:

  • The safest wallets.
  • These are portable and the users can carry around.

Cons:

  • Not very convenient and accessible.
  • May be expensive.

Paper Wallets

Paper wallets are classified as cold storage wallets. Their main function is providing the user’s private and public keys on a piece of paper.

Pros:

  • Safe
  • Accessible

Cons:

  • Can be easily stolen if you do not keep it in a safe place.
  • If the paper is damaged, there will be problems with recovering the Bitcoins.

However, as Bitcoins are getting common there people are starting banks designed for Bitcoins especially. For instance, BitcoinCryptoBank. Here is what they do:

  • It is a private company.
  • Allows people depositing their Bitcoins.
  • It’s open for worldwide investments.
  • The experts of the company manage the investments.
  • The investments are added to a pool and when the returns are available; the pool is divided and given to the investors.
  • The pool option decreases the fees for investment and increases the returns.

Buying Bitcoins with bank transfers

There are a lot of Bitcoin trading websites, which allow users buying Bitcoins with bank transfers. To learn more about that please check this.

To Sum Things Up

Bitcoins have been a hot topic for the last few years for a reason. Their world-changing nature made some people optimistic about future, while others started fearing from the collapse of the current institutions, which may be replaced and become more efficient thanks to Bitcoin-like blockchain technology.

Thank you; make sure you check our website to learn more about the amazing world of cryptocurrencies.

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