Bitcoin is sometimes viewed as a highly disruptive innovation with the potential to change the payment system. While it surely provides a lot of opportunities, it doesn’t necessarily mean that it will cut the banks out of the system. Bloomberg posted a piece yesterday in which it argues that the very banks that would feel any kind of threat from Bitcoin are currently studying the innovative nature of Bitcoin to possibly come up with their own kinds of seamless payment systems:
While Jamie Dimon and Warren Buffett express doubts about bitcoin, executives running the financial industry’s back offices are looking at mimicking the virtual currency’s methods of moving money quickly and cheaply.
FIS, a provider of systems used by banks to handle payments, is examining whether a public ledger like bitcoin’s could help securely move funds on existing networks, Fred Brothers, the firm’s chief innovation officer, said in an interview. Fiserv Inc. (FISV), a provider of technology for payments and accounts, is examining bitcoin’s use of encryption to ensure transfers are secure, said Marc West, a senior vice president.
“It’s safe to say that every bank is looking at what’s going on with bitcoin and those types of technologies,” said Steve Kenneally, a vice president at the American Bankers Association. “Most of the larger banks are investigating it. The larger the banks, the further along they are.”
This is not very surprising as competition dictates that market players will adapt to the changing conditions. The incumbent middlemen are trying to figure out what kind of threat to their operations Bitcoin might be and to turn this threat into an opportunity.
What is not clear is the extent to which these efforts will succeed. Currently, Bitcoin is still the dominating alternative currency in spite of a slew of alt-coins mushrooming up in the last couple of years. So, any efforts by banks, payment companies or other market players are not immediately guaranteed to take off. For now, Bitcoin is the currency of choice as far as cryptocurrencies are concerned.
Let’s take a look at today’s charts.
On BitStamp, Bitcoin edged 0.5% down yesterday which could be an indication that the short-term strength was over. This was further supported by the fact that the volume was almost halved when compared with that of the previous day. There was no strong move down, however.