Cryptocurrencies are all the rage these days, and for good reason. They provide a way to exchange value without needing to go through a middleman like a bank. This is obviously appealing to those who hold crypto assets—but what about those who don’t? In this article, we’ll explore why banks dislike cryptocurrencies and why they don’t want them around in their institutions.
Bitcoin and its mix of privacy, decentralization, and security cannot be easily controlled by banks
Bitcoin is not controlled by any central authority. Bitcoin is not tied to any government. Bitcoin is not tied to any bank, and it can’t be forged by a single person because all transactions are written into the blockchain a decentralized ledger that holds information about all of Bitcoin’s transactions.
The blockchain is also secured by a network of computers across the world, making it almost impossible for anyone to hack into it or change anything in the ledger without leaving behind evidence of their intrusion (which would be immediately noticed and verified). To put it simply: banks don’t like cryptocurrencies because they’re not easily controlled by banks.
There is no one to pay taxes or fees to. Nobody gets interest on cryptocurrencies
This is a big one. Banks like to get paid for every transaction that they process, and cryptocurrencies are not going to be supporting them in this endeavor by any means. There is no central authority issuing and managing the currency; cryptocurrency users are responsible for their own accounts, so banks don’t have anyone to pay taxes or fees to!
That’s why you can use your Bitcoin debit card at retail stores for free: no middleman taking a cut here. This makes cryptocurrencies an appealing option for traders who want to avoid paying hefty fees on foreign exchange transactions (the cost of converting one currency into another).
Cryptocurrencies have no credit history, which means banks have no way to know the risks of any transactions they are involved in
Banks are wary of cryptocurrencies because they have no way to verify the creditworthiness of a cryptocurrency user. When you open an account at a bank, they will look at your past financial history, including how often and on what terms you’ve paid your debts. Cryptocurrencies don’t have a centralized ledger like traditional currencies, so there’s no good way for banks to see if someone is trustworthy or not.
Banks need this information because they’re responsible for keeping their customers’ funds safe—they’re legally liable if anything happens to those funds while they’re in their possession. When someone deposits money into their bank account (or when they take out a loan), the bank considers that person’s credit history as part of its risk assessment process: if the person has paid back their loans on time and kept up with other financial commitments in the past, then it’s likely that they’ll continue doing so in the future.
This helps protect both parties from fraud: if someone hasn’t paid back debts before (or has defaulted on other obligations), then this is considered evidence that he might be likely to default again in future transactions too—which would make him unappealing as an investment partner or business partner because it creates too much risk for either party involved.
The blockchain system is currently not robust enough to handle large transactions, like those between banks or governments
The blockchain system is currently not robust enough to handle large transactions, like those between banks or governments. It’s also not fast enough (right now it takes an average of 10 minutes for a transaction to be confirmed), secure enough (the blockchain is vulnerable to hacks) and scalable enough (it has limited computing power).
Many people view cryptocurrencies as “fake money,” which means it undermines traditional financial institutions
According to Bitcode Prime, any people view cryptocurrencies as “fake money,” which means it undermines traditional financial institutions. Cryptocurrencies have a reputation for being used by criminals and tax evaders, which makes them unappealing to banks that want to be seen as honest and reliable.
Banks are also wary of cryptocurrencies because they’re not regulated or insured by any bank or government entity, so there’s no one to reimburse you if your cryptocurrency is stolen or lost. Many people use cryptocurrencies to avoid paying taxes on their income, which undermines governments’ ability to collect revenue.
This may seem like an extreme way of thinking about how currency works in society today, but this has been part of the political debate around bitcoin since its conception: For some people who want more control over what they do with their money (or don’t), cryptocurrencies provide that option at the expense of being shunned by conventional institutions such as banks and governments.
The volatile price fluctuations of cryptocurrencies make them too risky for big financial institutions to consider as a stable investment
Banks and other financial institutions are risk-averse, which means that they need to be able to predict what’s going to happen in the future. This is why you’ll see banks offering products like CDs, which guarantee a fixed return on your money for a set period of time.
Cryptocurrencies are still relatively new technology, so it’s hard to predict how much they will be worth in the future because their value is largely driven by speculation and popularity rather than actual use cases for crypto as currency or payment method.
Cryptocurrencies are a threat to banks because they can’t profit off of them, and because they don’t have control over them
Banks dislike cryptocurrencies because they are a threat to the bank’s profit margins, and banks don’t have any control over them. Banks make money by charging interest on loans and credit cards, so they need to find ways to create more debt in order to keep their profits up.
Banks also make money through fees for services such as overdraft protection or wire transfers (which are often less than convenient for the customer). Cryptocurrencies have no interest rates, so there is no way for banks to charge interest on them, nor can you do wire transfers from one cryptocurrency wallet to another—something that would likely cut into bank revenue significantly.
Conclusion
It is clear that banks have a lot to lose if cryptocurrencies continue to grow in popularity. But the reality is that many people still don’t trust banks, and for good reason: they’ve seen what happens when one goes down (or gets shut down).
In this respect, cryptocurrencies are an interesting alternative because they offer many of the same benefits without any central authority controlling them. While they may be risky investments right now, it’s important to remember that anything can change as time goes on!
