Central authorities and major financial institutions responded to the emergence of Bitcoin by targeting the development of its underlying technology in attempt to distract the real value of the digital currency.
Experts have criticized the desperate attempts of banks in adopting the technology, describing that blockchain is a euphemism for people that don’t understand Bitcoin.
Since 2015, banks have poured hundreds of millions of dollars in capital and a significant share of their resources for the development of private blockchain networks. In an awkward series of events, the blockchain technology has been referred to as a mystical invention that creates an irrefutable and unalterable ledger for banks and financial institutions to store transaction data and private information.
Not a single working product to showcase
Most notably, organizations like the R3 Consortium have focused on the development of permissioned blockchains, or blockchain networks overseen by local network administrators, for banks to create a cost-free and robust financial network to handle its transactions and settlement of assets.
Yet, after three full years of development, banks and financial institutions don’t have a single working product to showcase, which demonstrates the technical and financial difficulties present in integrating the blockchain technology into the centralized IT systems of banks. In other words, integrating a decentralized technology into a centralized system simply doesn’t work.
Vinny Lingham, Civic CEO and Angel investor recently described the blockchain technology as a euphemism for people that don’t understand Bitcoin.
@Melt_Dem yawn. Blockchain is a euphemism for people that don't understand Bitcoin :-)— Vinny Lingham (@VinnyLingham) August 28, 2016
Samson Mow, YourBTCC COO and Pixelmatic CEO, commented on the hype of blockchain technology:
According to legend, if you say Blockchain three times fast, your databases will magically become immutable & your company a fintech leader.— Samson Mow (@Excellion) August 28, 2016
The fear of banks towards bitcoin
In contempt of the losses and harsh criticisms, banks are continuously funding various blockchain projects to alleviate the pain of embracing Bitcoin and its impact in the global financial ecosystem.
By replacing Bitcoin’s greatest assets that are transparency and decentralization with obscurity and centralization, banks have developed and is attempting to distribute a technology they call a permissioned blockchain.
Security expert and the author of Mastering Bitcoin Andreas Antonopoulos believes that the banks are in the denial phase, which will inevitably end when banks and financial establishments recognize the actual market value and the potential of Bitcoin.
For a few years, banks have executed a tremendous plan of dimming the spotlight on Bitcoin by riding the blockchain hype train. However, experts predict that in the long run, bank-financed blockchain projects will eventually vanish from the financial market and banks will support the development of Bitcoin-focused ventures.