Decentralized and traditional finance tried to destroy each other but failed

The year 2022 has arrived, and traditional banks and the banking system are still alive, despite years of worrying predictions by crypto enthusiasts. Vitalik Buterin published a new Ethereum 2.0 roadmap at the end last year. This was the only endgame.

Despite the fact that this roadmap would make the crypto industry more positive, we saw 2021 as a reminder that crypto did not destroy or harm the central banks in the same way traditional banking did. Why?

Fair enough, both sides were equally brutal in their fight. Many crypto enthusiasts screamed about the impending apocalypse in the financial system and envisioned a bright future where all items could be purchased with Bitcoin (BTC). Bankers, on the other hand, rushed to defend traditional banking systems and accused blockchain technology of being inefficient and not compliant.

Both parties were incorrect in their predictions.

Equal game

Although they wanted to, crypto and traditional banking were not destroyed. One, no major crypto project has avoided the most tight integration with banks. A banking license was granted to Kraken, a crypto exchange based in the United States. The Coinbase IPO process is a 100% game according to banking/financial systems rules. The top projects only use the services of a handful of banks: Signature SilverGate, Bank Frick — which focuses settlement and enforces banking principles when working with crypto.

The banking industry created their own ecosystems to support crypto projects. Visa offers crypto advisory services to assist partners in the crypto world. Amazon Web Services (AWS), which aims to “be the AWS for crypto,” proposes Switzerland banking services for crypto-related transactions. SolarisBank offers an API to support crypto projects. Services related to cryptocurrency are being launched by the largest American banks and exchanges. Bitcoin is recognized in El Salvador as a method of payment. This theoretically means that international financial institutions must be available to settle Bitcoin payments with El Salvador.

Related: What’s the real reason behind El Salvador’s “Bitcoin Law”? Experts have the answer

What stopped crypto banks from being destroyed?

Humankind. Many new technologies have been subject to control by state authorities, directly or indirectly through corporations throughout the history of humanity. All of the new technologies — radio, television, internet, and social networks — started out with the idea that information could be freely distributed. But eventually, total control was established. It is the same story with blockchain and it is unlikely that it will change.

People tend to exaggerate risks and minimize the chances of a positive outcome. I believe that this is what has made it difficult for people to accept cryptocurrencies. This way of thinking, however, is part of our human nature.

Yet, decentralization is still defeated by centralization. The world government took some time to realize that blockchain technology could not only be a problem, but also a powerful tool to achieve political goals. The original purpose of the blockchain was to be a powerful freedom tool. However, it became a tool for money control in a way that was completely unimaginable. The blockchain is like nuclear technology in that it can be used for both peaceful and military purposes.

Related: Centralization vs. decentralization: What is the future? Experts have the answer

It was not a loss though

The initial position of the “hawks” was clear at first, but crypto needed to move back. It was given widespread recognition and distribution, and gained a significant number of users all over the globe. This seems like a fair reward, and a victory over those who had predicted its imminent demise.

The significant rise in Regtech technologies that speed up compliance and allow for all checks has resulted in crypto acceptance by traditional finance. The projects that provide solutions for Know Your Customer (KYC/AML) have shown a crypto response from the banks. Companies like Chainalysis and Onfido are able to build KYC operations more efficiently, while still maintaining full legality.

Related: Individual crypto investors win in the battle of DeFi vs. banks

Newly-established startups couldn’t follow the low-efficiency compliance path in banks. This is a break in nearly any process. They were able to comply with legal requirements and conduct business in a legitimate industry.

But can CBDCs really destroy crypto? Instead of focusing on the future, we should be able to stop talking about destruction. There are problems with central bank digital currencies (CBDCs), particularly in terms of interoperability. We won’t be in a position to discuss a quick solution due to incompatibility between CBDC issued by different countries, inability to convert them both, and slowness in many government processes.

This article is not intended to provide investment advice. Every trade and investment involves risk. Readers should do their research before making any decision.
These views, thoughts, and opinions are solely the author’s and do not necessarily reflect the views or opinions of Cointelegraph.
Alex Axelrod, founder and CEO of Aximetria is also the founder and CEO at Pay Reverse. Axelrod is also a serial entrepreneur and has over a decade experience in leading technology roles. He was the director for big data at JSFC AFK Systems’ research and development centre. Alex was previously the director of big data at JSFC AFK Systems’ research and development center. Prior to that, he worked at Mobile TeleSystems, Russia’s largest telecom provider. He also headed the development of antifraud systems.

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Eileen Wilson

Eileen Wilson –Technology and Energy My Name is Eileen Wilson with more than 5 years of experience in the Stock market industry, I am energetic about Technology news, started my career as an author then, later climbing my way up towards success into senior positions. I can consider myself as the backbone behind the success and growth of topmagazinewire.com with a dream to expand the reach out of the industry on a global scale. I am also a contributor and an editor of the Technology and Energy category. I experienced a critical analysis of companies and extracted the most noteworthy information for our vibrant investor network.

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