Banks and Big Business Scramble for Their Own Digital Cash - AMBCrypto
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Banks and Big Business Scramble for Their Own Digital Cash

Biraajmaan Tamuly

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Banks and Big Business Scramble for Their Own Digital Cash
Source: Samantha Miles

Last week Reuters reported that several of the world’s biggest banks have invested $50 million to “create a digital cash system to settle financial transactions”. It’s an on-going project, according to the report, involving the likes UBS, Credit Suisse, Barclays, and Deutsche Bank.

Banks are being tight-lipped on the project, and it should be noted that Reuters’ report involved an unnamed source, but there was a confirmation from a Barclays’ spokeswoman that the bank is involved in the USC (utility settlement coin) project and that the research and development stage had come to an end.

Any mainstream interest in cryptocurrency and blockchain is always significant, of course. But should it determine whether we buy Bitcoin or other digital currencies? That is to say, should backers of crypto be worried that banks creating their own digital currency be worried that the likes of Bitcoin, Ripple, etc. will be shunted aside?

Investors buoyed by Bitcoin’s streak in 2019

In truth, investors in cryptocurrencies shouldn’t worry too much, certainly in the short term. Financial institutions have been notoriously slow in not only embracing the possibilities of blockchain technology but in addressing the problems that they are trying to solve.

The new entity banks are reported to be creating to run the project, Fnality, is aimed at making clearing and settlement in financial markets more efficient. This is not a new issue, but something that has made financial transactions cumbersome for decades.

The point is, one could argue, that while financial institutions are addressing issues that have been around since the 1970s, those developing cryptocurrencies could be stealing a march on financial solutions for the 2020s. Banks will be looking for solutions to long-standing problems, whereas developers will be looking for solutions to problems that have not yet been pinpointed.

Yes, some investors will welcome mainstream embracing of crypto – in any form – as a positive sign, but it is the sense of ‘rule-breaking’ at the development level that has always made cryptocurrency an existing investment.

Facebook also interested in crypto

Banks, of course, are not alone in making a foray into the world of cryptocurrency. Facebook has also been upping its plans to create a digital currency. The so-called ‘Facecoin’ or, as has been reported, Project Libra, is creating quite the stir, albeit it is still shrouded in secrecy. Most observers believe it will be used to facilitate payments, and that it will be a stablecoin.

The speculation around Facebook’s digital coin has ramped up in recent weeks. And, as so often the case with anything to do with Mark Zuckerberg, a bit of hyperbole has infused the reporting. It’s been suggested that Facebook “has lit a fire’ under Bitcoin and crypto”, and that “it’s a catalyst for mainstream Bitcoin and cryptocurrency adoption” around the world.

Take all of this with a pinch of salt. At the same time as being told Facebook is creating a “rival to Bitcoin”, we are also told it’s a catalyst for Bitcoin adoption. The truth is that we do not know exactly what banks or Facebook or planning, nor what that impact will be further down the line.

Yet, through all of this increased speculation in the first half of 2019 of mainstream financial and tech giants exploring crypto, that has coincided with Bitcoin going on a tear throughout the year so far. For most investors, that’s the important thing, not the speculation on other projects.

Biraajmaan covers market trends of major cryptocurrencies. As a graduate in engineering, his interests lie in Blockchain technology. With over a year as a journalist, his articles focus on US and UK markets.

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