Bitcoin will do to banks what email did to the postal industry?

The above statement was made by Rick Falkvinge.

It is well known that Bitcoin was the first digital currency for easier day-to-day transaction from individual to individual. This cryptocurrency was introduced by the anonymous group or individual; Nakamoto (2008). Bitcoin is operated without middlemen such as banks and monetary institutions. Unlike the current practice, the bank functions as the middleman or the go-between, knows the identity of buyer and seller, thus engendering the issues of personal data protection.

According to Fauzi, Paiman & Othman (2020: 2) the Bitcoin platform has made the trading and transaction of cryptocurrency much easier and more independent, without compromising personal information and details. To some, opting for this method of transaction has entitled them to transact freely and anonymously.

Bitcoin is the first digital coin in the world to have used the blockchain platform. It is created within a transaction log with computers participating across a network (Bohme et al., 2015). This blockchain has one of the highest security systems by not allowing fraudsters to use the currency more than once. The blockchain protocol rely on proof of work where it ensures miners converge to this structure. The computational operation is known as hashing where the term hashing power refers to the computational power of mining the currencies (Kiayias & Panagiotakos, 2015).

The system in the cryptocurrency market is rather complex and quite difficult to understand, even for the players in the industry and researchers doing studies in this field (Fry & Cheach, 2016). There have been many researchers revealing the benefits of Bitcoin such as security (Bariviera et al., 2017), low transaction costs (Kim, 2017), high returns (Ciaian et al., 2016; Kristoufek; 2013; Hong, 2017) and as for alternative instrument for a country’s bailout mechanism (Bouri et al., 2017) and use for employees’ wages (Angel & McCabe, 2015). Despite that, there are also researchers pointing on the risk and drawbacks of using this digital coin, in term of lack of regulation (Cheung et al., 2015; B?hme et al., 2015), high electricity bill due to energy consumption (Hayes, 2017; Vranken, 2017), lack of security (Bradbury, 2013; Conte De Leon et al., 2017) and other issues such as anonymity (Androulaki et al., 2013) and switching cost (Luther, 2015).

Why I stand closer to the statement that “Bitcoin will do to banks what email did to the postal industry”

? Current trends and future expectations.

Bitcoin prices have ranged from $1 in April 2011 to its all-time high of $66,974.77 on October 20, 2021. Investors have had a turbulent flight since inception in 2008. Apart from daily volatility, in which double-digit increases and decreases in its price are not uncommon, they have had to contend with numerous problems plaguing its ecosystem. From multiple scams and fraudsters to an absence of regulation that further feeds into its volatility. In spite of all this, there are periods when the cryptocurrency’s price changes have outpaced even their usually volatile swings, resulting in massive price bubbles (Internet source: 2021).

De Best (2021) indicates that in April 2021, the Bitcoin market cap reached an all-time high and had grown by over 1,000 billion USD when compared to the summer months. The market capitalization declined since that moment, reaching roughly 600 billion U.S. dollars in June 2021. Market capitalization is calculated by multiplying the total number of Bitcoins in circulation by the Bitcoin price. The Bitcoin market capitalization increased from approximately one billion U.S. dollars in 2013 to several times this amount since its surge in popularity in 2017.

So clearly, it’s on the increase. However, predictions for the future value of Bitcoin vary based on who makes the estimate. According to Jeremy Liew, a partner at Lightspeed Venture Partners, Bitcoin could reach $500,000 per coin by 2030. According to the June 2020 Crypto Research Report, the cryptocurrency could go over $397,000 by 2030 Crypto Research Report (2021). Yet others predict that Bitcoin is just a bubble, and they are worthless, predicting a very low value in a decade.

? More access to Bitcoin

The public (World) is only slowly becoming aware of its existence. As many as 25 percent of Americans were still not familiar with Bitcoin as of 2019. While there are over 18 million Bitcoins in circulation, there are only 6,674 Bitcoin ATMs around the world. So, its physical presence is minimal, and most ATMs are located in the United States. As trends increase and more online shopping transactions occur, more people will have access to Bitcoin.

According to Moneyweb several number of bank branches have recently closed in SA due to covid 19, +/- 700 from 4 big banks, this also has impact on this issue of bank visitation. Lastly, like people not directly going to the post office to send items, people will most likely not go to the bank to send or receive money. They will use their online banking apps.

? Geography

More and more people are using online banking and other third-party tools in transacting, where extra costs and time is incurred. These costs are expected to drop with the use of Bitcoin as it only takes a few minutes to send any amount of money. Regardless of the amount or the destination. Making a move to another part of the world through your bank can be extremely expensive. When done in Bitcoins, the cost is either negligible or non-existent. Bitcoins can be sent to any nation on the planet. Bitcoin, like the Internet and e-mail, has no geographical limitations. This, combined with the assurance of protecting its users' rights, makes Bitcoin the first truly global currency.

Bitcoins enable buyers to complete transactions without disclosing any confidential financial information to the seller. Bitcoins are just like digital cash that hackers can't get their hands on in any way. At the same time, your identity is hidden for good. This goes a long way toward avoiding targeted data breaches like the one at the UPS Store1. In the case of BTC2, consumers benefit from anonymity because all their data is kept confidential and stored using blockchain technology. Transparency, on the other hand, allows users to conduct transactions in their own time and with complete freedom.

Conclusion

Cryptocurrencies are here to stay because our modern economy relies heavily on digital means of payments. Bitcoin presents a natural progression from barter system, gold standard/paper money and now digital currency. Needless to say, that, users and industry player can evaluate whether cryptocurrency can benefit or harm them, in accordance with their objectives and perspectives in owning it. This paper has reviewed the current trends and future expectations, access to Bitcoin, the geography of it. Lastly highlighting the possibility that Bitcoin will do to banks what email did to the postal industry.