Photo by Pxhere, CC BY
Banks and money go hand in hand, right? So why is it that many of the world’s largest financial institutions are quite reluctant to accept Bitcoin or any other cryptocurrency? As cryptocurrencies continue their upward trajectory, it makes sense that worried investors hope that banks will soon allow customers to open Bitcoin accounts. After all, they are the most secure place to keep your money.
However, it looks increasingly unlikely that banks will bow to customers’ demands. Just last month, a group of banks and financial institutions announced that they would no longer accept credit card transactions for Bitcoin purchases, sending crypto-investors into a spin. The reason behind the ban is one of self-preservation, which, given the volatile nature of the crypto-market, is understandable.
Last year, many first-time investors jumped in at the deep-end and purchased as much Bitcoin as they could. And those who didn’t have the savings to do so turned to their credit cards. The premise was simple: buy Bitcoin on credit, then sell at a profit in a couple of months’ time. Only Bitcoin suffered a slump, and many of those would-be investors are now out of pocket and waiting for their investment to appreciate over the next few months. The problem here is that the mania surrounding Bitcoin’s massive rise in value emboldened people to borrow beyond their means. And now they are suffering for it.
Banks, as we are all too aware, are good at hedging their bets. And with the recent rumors that the U.S. Congress is considering regulating cryptocurrencies, it’s only natural that they are taking the safe approach to Bitcoin. However, there are ways that banks can still offer their customers at least some form of cryptocurrency service without incurring a risk.
We can take the casino industry as an example. Although few accept cryptocurrencies in lieu of cash at the table, casinos that accept Bitcoin for non-table activities are seeing increased revenue from this technology as they provide a service that their customers want and embrace change rather than fight it. For these casinos, it’s a win-win situation. They allow customers to use Bitcoin for food, drink and even lodging while accepting their hard currency at the tables. Can banks learn from this example?
At first, it was easy for the banks to dismiss the hysteria surrounding Bitcoin and Ethereum as a flash in the pan and with good reason. We all remember how Bitcoin disappeared for years after its first initial coin offering (ICO). However, this time around, things are a little different, and there’s no denying that Bitcoin and cryptocurrencies look like they’re here to stay. So, while we understand the bank and credit card companies’ need to ban purchases on credit, we still feel that they should be doing more to embrace the shift in their customers’ attitudes.
Would it be beyond the realm of possibility for banks to offer some sort of offline cryptocurrency account for their customers? Perhaps they could put accounts on a server, which is offline always and, therefore, immune to hacks. Of course, this is a simplistic suggestion and harkens back to the days of the old bank vault full of cash, but it is a possibility.
Rather than shut out a currency that people are increasingly growing accustomed to, it would be far more beneficial if the banks started to develop a strategy to deal with their customers’ needs. Yes, banks should jump on the crypto-wagon, but the chances are they won’t. They’re just too scared.