Established financial institutions and banks failed to understand and embrace the decentralized and transparent nature of bitcoin and the blockchain technology since its birth in 2008.
Some bitcoin experts and financial gurus argue that banks still don’t have a solid grasp of Bitcoin’s core values and purposes.
Bitcoin as a technology and a currency was created to be used by anyone without the influence and control of a central entity. However, Over the past few months, Wall Street banks, multi-billion dollar financial organizations and groups have joined a blockchain research group known as the R3 consortium, trying to create blockchain-based applications, platforms and currencies to “decentralize” current financial systems.
Although these organizations’ positive approach toward the blockchain technology is regarded as something positive, they still demonstrate a hostile view toward bitcoin, claiming that bitcoin is not viable as a currency and as a technology due to its “restrictions” and limitations.
Essentially, banks are trying to adopt the technology, which is meant to support a decentralized currency to develop a centralized application. By using the blockchain technology, these institutions want to create an automated and transparent banking system secured by cryptographic algorithms.
The problem with this approach is, the banks are disregarding the decentralized nature of bitcoin and the blockchain technology. The reason behind the banks’ struggle in the process of embracing the blockchain technology is that they are trying to centralized what already has been decentralized.
Creating and deploying centralized applications on a decentralized platform is not only effective but unsecure. The Bitcoin network’s security is maintained by millions of miners around the world that generate enough computing power to secure the blockchain. However, the banks currently have no fundamental understanding of this “security” concept.
“They want to adopt the efficiencies without the decentralization, the low cost but with control, and the global nature but with censorship,” said Antonopoulos. “You can’t have the revolutionary nature of Bitcoin while stripping it of all the things that make it innovative and exciting.”
It would be interesting to see how the banks will embrace and adopt the blockchain technology to apply it to their existing financial platforms. Some bitcoin experts expect banks to adopt Bitcoin itself as early as 2016.
