Blockchain is the future of banking technology
The traditional banking industry is currently experiencing one of its most severe crises in its history. It has lost its way and is not serving its primary goals anymore: safekeeping clients’ assets and executing transfers quickly and efficiently. Modern pace of life and globalization creates even more pressure, remote work has become a norm, cross border contracting with agents in any part of the world is not a privilege of big corporations anymore. And yet money transfers are slow, expensive, hindered by tons of complex regulations.
The goal of safekeeping clients' funds is not fulfilled either. Even common citizens of developed countries can see their money locked and held hostage to the incompetence of compliance departments. Companies are not immune to this problem either but are also facing challenges when banks out of abundance of caution decide to hold and investigate potentially crucial transactions, keeping the funds in limbo.
It paints a rather grim picture, and many people just accept it as a status quo as there is no other way, it would seem. And yet brilliant minds of the last few decades have developed new technology that we all heard of and that can, among many other things, heal our banking industry and help it rise to the challenges posed by modern society. The technology is blockchain.
At this time, you might be thinking that we are trying to sell you another shitcoin and this is by far the saddest thing, that the technology was not properly understood by many and was reduced to a means of carrying out shady and at times straight out criminal activities. Let me take you a few decades back in time and tell you how it all began:
In his 1982 dissertation titled "Computer Systems Established, Maintained, and Trusted by Mutually Suspicious Groups," American cryptographer David Chaum first proposed a protocol similar to blockchain. Subsequently, in 1991, S. Haber and W. Scott Stornetta described a cryptographically secured sequence of blocks. They aimed to create a system where the timestamps of documents could not be forged. In 1992, Haber, Stornetta, and Dave Bayer improved their technology by introducing a hash tree, which increased its efficiency by allowing multiple document certificates to be combined into one block. Recognizing the commercial potential of developing technology, they created a timestamp service called Surety to launch their scheme.
In 2008, an individual known by the pseudonym Satoshi Nakamoto (the true identity remains unknown, possibly a group behind this pseudonym) proposed a common algorithm for the Bitcoin system. The main component of this system became a continuous sequential chain of blocks of information, known as blockchain. A significant departure from previous technologies, including Hashcash, was the combination of a chain of hashes with a formal mechanism for reaching consensus on the correctness of the next block. This allowed the system as a whole to avoid the need for information verification through a trusted agent (administrator), and it became decentralized.
In 2009, the first version of the cryptocurrency Bitcoin was released, based on a decentralized blockchain that serves to record all transactions in the system. Subsequently, blockchain technologies became associated solely with cryptocurrency.
If I wanted to explain what a blockchain in the financial is to someone who has little to no technical knowledge I would say that a blockchain is a publicly accessible ledger of linked transactions done in a way verifiable by all parties and possessing a mathematically proven property that the preceding transactions cannot be altered once they are confirmed. Through advances of modern cryptography only the owner of the key can create new transactions in his account. These properties are not based on elusive promises of the banks but on strict mathematical principles.
One important distinction between blockchain in general and cryptocurrencies. Crypto was conceived to solve a rather different problem, that of inflated liquidity with an attempt to put real value back into the currencies that they lost when the gold standard was abandoned. A respectable goal, that, unfortunately, traditional crypto has completely failed to achieve. Huge volatility problem makes it almost impossible to use for anything but speculation games. Stable coins on the other hand are a completely different beast. They are meant to be a representation of real currencies stored in blockchain ledger with prices fixed within the margin of error. This makes them uniquely positioned to help us get to the next era of banking.
We have technology (blockchain) and financial instruments (stable coins). What is the missing piece of the puzzle, you ask? User Experience. User experience is everything, no matter how great your idea or product or service is, if it is hard to understand and use it will never take off. And, oh boy, is crypto hard! It is hard to deal with on its own, but we all know that the vast majority of the world still uses fiat. Imagine a business owner having to figure out how to send crypto he received to the exchange, then selling it there in exchange to euros, finding their way through a rather complicated UI, making the withdrawal, waiting for it to be approved, keeping in mind to keep proper records for future audits. All of this, just to pay the bills. I bet the vast majority of people abandon the idea on step two, unless they are hardcore crypto enthusiasts.
We think that the world is ready for the next generation of banking, based on blockchain technology, transparent and secure. What needs to be done is to bridge the gap between crypto and fiat and make the payment experience between two worlds as seamless as paying between currencies in Europe is. You don’t give much thought if your account is denominated in EUR or CHF. You don’t struggle with how to sell one currency and buy another just to pay your partner. This is one of the things conventional banks still do very well and by bringing the same experience, blockchain banking will finally be accessible to everyone.
Imagine the future where your money is not kept in custody by huge financial institutions at their mercy, but are in the global blockchain and nobody, literally, nobody can do anything with them without your digital signature, when it is not a promise, but a mathematical fact. The future when you can send money almost instantly to any part of the world, and this transfer is safe and transparent. This is the future we envision and aspire to create.