With Bitcoin having thrown the fits-and-spasms of history on its head, commercial banks are now taking a route other than straightforward co-option in favor of creating their own virtual money.
With individuals all over the world seeing the utility in the low cost of international Bitcoin transfers, some commercial banks want to compete with Bitcoin, according to Kirk Hope, the chief executive officer of the New Zealand Banker’s Association in an e-mailed transcript of an interview with TVNZ television.
“If it’s not Bitcoin it might be some other type of digital currency that could come into play,” Hope said. .
The currency still faces problems around legitimacy, Hope said. “They are being used to buy things like arms and drugs,” he said. “I suspect tax isn’t being paid on Bitcoin transactions.”
All-in-all, Hope demonstrates an acute lack of understanding about Bitcoin. For instance, he cites that there can only be 21 million bitcoins in existence as a rationale to argue for Bitcoin shortcomings. That “satoshies” can be spent (up to the eighth decimal place) make Bitcoin a potentially very robust exchange unit. He says, “you wouldn’t want to pay $300” for a cup of coffee, as if he doesn’t understand that a Bitcoin can be subdivided at all.
There are many ways in which Bitcoin could be adopted by the more mainstream banking institutions. Products and services are brought into the payment space all the time. Bitcoin is two products: both the exchange unit and the processing mechanism. This might be intimidating for a company like MasterCard, Visa and banks, but it is a reality that they must adapt to. What they will have to understand that, for many users, Bitcoin’s decentralized manner is one of its primary benefits.