What Cryptocurrency Means for the Conventional Banking Sector
Bitcoin is disrupting the banking sector by creating enormous interest among institutional investors, creating a need for smart FinTech strategy for brands.
2018 was a tough year in the cryptocurrency space, as the value of Bitcoin tumbled from $20,000 to below $4,000. 2019, however, has been a different story, with the market rebounding and cryptocurrencies becoming a core part of institutional FinTech strategy and banking strategy.
So what does the future hold for Bitcoin and the financial sector?
How Bitcoin went from novelty to banking industry disruptor
Bitcoin, the world’s most popular digital currency, began life as a hobbyist pursuit. Created roughly a decade ago by the anonymous developer Satoshi Nakamoto, Bitcoin was designed to be peer-to-peer digital cash. People could send it to each other with no bank or third party needed to validate the transaction.
That’s because Bitcoin transactions are validated not by a bank, but by a technology called blockchain. When one person sends Bitcoin to another, the transaction is confirmed by a miner. This miner isn’t a person with a pickaxe and persistent case of black lung, but rather someone who uses computing power. When Bitcoin transactions are made, miners use powerful computers to compete with each other to solve complex cryptographic puzzles for a small transaction fee. Whomever solves the puzzle first validates the transaction, which is then recorded on the blockchain – a public ledger that can’t be changed.
That’s Bitcoin in a nutshell – and you can see why the technology is so transformative. Instead of waiting several days to have a bank clear a transaction, a Bitcoin transaction is completed within ten minutes, in most cases. Other cryptocurrencies with a higher degree of centralized control can confirm transactions almost instantly.
Here’s the irony: Bitcoin was created and later developed by a band of misfit programmers who were entirely outside the financial system. Yet today, cryptocurrency adoption is being pushed forward by the financial services, marketing agencies, and companies that Bitcoin promised to make obsolete.
Why institutional adoption is driving market growth
Bitcoin’s price rebound in 2019 has been driven, in part, by the movement of institutional money into the cryptocurrency space. A few years ago, most legacy financial firms were bearish on cryptocurrencies -Jamie Dimon of JPMorgan Chase famously called Bitcoin a “fraud” that governments “would crush.”
Today, Dimon has reversed his position and is pushing his firm headlong into the space. JPMorgan Chase has launched their own cryptocurrency. Facebook, too, recently announced plans for their own cryptocurrency, while Google and Amazon both have significant partnerships with cryptocurrency projects.
Why the abrupt about face? As with any radical new technology, skepticism abounds early – “magic Internet money” created by a person named “Satoshi Nakamoto” seems almost too far-fetched to believe. Then, once people grasped the fundamental innovation Bitcoin offered, the financial services sector began to view cryptocurrencies not as a joke, but as an existential competitor.
And that’s where we are today. Cryptocurrencies hold the potential to radically transform how the banking sector operates. Using the traditional banking system, the fastest way to get $10,000 from New York to California is to fly it in a plane. In a 21st century hyperconnected world, that seems absurd.
Cryptocurrencies makes such transactions instant, as there is no need to wait for third parties to validate that the money being transferred is actually there. That’s the reason cryptocurrencies have become a core part of banking FinTech strategy – and why we’ve likely only seen the very earliest stages of what could be the most significant technological development since the Internet.
Brands in need of FinTech marketing services should consider one question: Does my FinTech marketing agency have the necessary domain knowledge to provide us with truly informed, high-level digital marketing for financial services?
At Bigeye, we understand FinTech strategy and cryptocurrency on a much deeper level than most financial services marketing agencies. When it’s time for your next campaign, we urge you to contact us and find out why Bigeye is so much better.