As Bitcoin becomes more and more popular, a larger number of people are beginning to develop projects surrounding the cryptocurrency, and one of these is backed by the idea of a bitcoin wallet acting as a bank, and therefore, doing just about everything that a bank is entitled do.
According to recent reports, it seems like some developers are seeing this idea as an evolution of the current bitcoin market, but others think just the opposite, as granting a Bitcoin wallet so much power also makes it susceptible to being controlled by a government, or having a strong role in the loss of the decentralized state of the currency, which is currently adored by most of its users.
The premise that we’re talking about would practically allow people to store money in a wallet and gain interest from doing so, which sounds sweet until we start thinking about what borrowing Bitcoin will be like. Granting loans is usually a process that needs to be backed by a large number of documents that would have to be sent to the Bitcoin wallet in order to be able to be borrowed money. However, gaining a legal status by trading money and official documents like this may turn out to be quite a difficult experience.
While there are a couple of services which are willing to borrow their users money in the form of a cryptocurrency, there isn’t any that has currently taken the banking concept to the market until now, which in my opinion, is great news. Together with this, the idea may also not be feasible at this moment in time due to the volatile state of the currency, which would then bring extremely unstable exchange, commission and interest rates that would make such a system doomed from all the points of view.
So far, the cons outrun the benefits, but taking a look at the positive influence of such a system would also be a good idea, as it does have some potential, but just not in this form. As storing cryptocurrency on a Bitcoin wallet and having the option to be paid an interest for it and to lend some money when needed definitely won’t do any harm, what will Bitcoin banks be legally entitled to do when a loan isn’t paid back as long as a legal basis isn’t set up? While the Bitcoin Foundation does have a lot of influence and could set up a couple of rules to be followed by all of these banks, the process would then make thousands of users from all around the world question the autonomy of the coin, which most probably will not be good publicity for the coin.
Based on everything that has been outlined so far, what do you personally think about Bitcoin banks? Is this idea feasible in a way or another? Will it make cryptocurrencies more or less popular? Let us know your thoughts!