As the banking crisis of March 15 has demonstrated, the implications of bank runs have become much more concerning in the modern era. Jerome Bernstein analysts argue that as rapid depositing begins to become more commonplace, the counter-party risks for customers will heighten and the potential for cryptocurrency to act as a solution to these risks will rise. Through the advent of the Federal Reserve's plan for an instant payment system, payments will become more accessible for financial institutions of all sizes, with responsibility for risk resting with the customer. This phenomenon has been referred to by both the Bernstein analysts and staunch Bitcoin believers as 'hyper-bitcoinization': a system where the advantages of smart contract based decentralized financial systems become increasingly relevant. A system such as this would lead to more personalized banking experiences tailored to the user and real-time asset liquidation without any lag. Looking towards the future, this system would make banks obsolete in favour of self-sourced, trusting the user to make decisions and administrate risk, creating a much more independent financial system.
Nina Thompson
- 2023-03-31
An Emerging Phenomenon in Modern Banking
This article discusses the banking crisis and how cryptocurrencies are becoming increasingly relevant as a solution to the modern banking system's counter-party risks. It looks at the advantages a smart contract based decentralized financial system has and how it would make banks obsolete.
