Banks Must Soon Adopt Crypto To Remain Competitive

February 21, 2021
Kevin Larkin

Bitcoin and cryptocurrency news has been flooding the fintech world in huge waves over the past few weeks, but especially recently. With Elon Musk’s huge purchase of over 1.2 billion and announcing that Tesla will soon accept bitcoin as legitimate currency, he’s had quite the impact on the digital currency market. So much so that the value of the bitcoin market has exceeded €820 billion this past week and continues to rise. All of this news has led many traditional financial institutions and fintech companies alike to issue statements about how they will treat cryptocurrency in the near future and if they plan to let customers and merchants use it on their platforms. It has become evident that banks will need to accept cryptocurrencies as easily as they do other more standard forms of currency, whether they’d like to do so or not.

According to the Cambridge Center for Alternative Finance, the number of active crypto users has tripled since 2018, to now being at over 100 million in 2021, and there’s no signs of that trend slowing down. So far the data shows that crypto transactions on fintech platforms have been financially successful, as PayPal announced that in its last quarter in 2020 they saw a 36% increase in transactions just from crypto transactions alone. However, in a world where digital currencies are being exchanged the same way traditional currencies are, there will need to be some major restructuring to our traditional banking system. It will take more than just allowing people to use it as some fintech companies like PayPal and Mastercard are able to do. In fact, China has already showed signs of accepting digital currencies in their central banking system as part of their Digital Currency Electronic Payment program (DCEP). If China wasn’t already a global superpower in exports and one of the world’s largest economies, this will certainly be a huge step for them getting ahead of the curve early.

China isn’t the only central bank testing digital currencies, as there are actually over 60 central banks globally testing the idea, but China is the only one where a digital currency, in their case the digital yuan, is actually working. This will serve as a lesson to the world that whether we approve of it or not, the crypto wave is coming and no matter how we may feel about it on an individual level, we must adapt and look optimistically to a world where physical cash is becoming more and more a thing of the past.

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