How to Secure a Crypto Bank
Securing a crypto bank is a difficult task for bitcoin-related businesses. On one hand, blockchain technology is disrupting the financial sector with newer, more secure banking solutions. On the other hand, lawmakers don’t know how to regulate crypto banks and their customers. This is creating an atmosphere of confusion and distrust. If you are a bitcoin business, you can still secure a crypto bank, it’s just not going to be as easy as walking into your local branch. Read through to the end for a robust crypto banking solution that will keep your business up and running.
Banking on Blockchain
Banks are beginning to embrace blockchain technology for its security. In the simplest terms, blockchain is a decentralized digital ledger that records transactions. Since each transaction builds on the previous transaction with a new interlinked block, it is nearly impossible to “fake” or tamper with a transaction. As cyber crime continues to increase in frequency and scope, many are hailing blockchain as the secure future of banking technology.
On the other hand, the very attributes that make blockchain secure also make it difficult to regulate. Since transactions are anonymous, outside of your personal key (or code), it is impossible to identify the parties involved. The security provided by blockchain technology and the way it builds on itself make it impossible for regulators to analyze individual transactions or identify users. When it comes to banking regulation, identifying the users, or knowing your customer (KYC), is essential.
While banks are still wary of blockchain as it relates cryptocurrencies, they are seeing the value in the technology as it applies to other areas of finance. Blockchain is now being used to help financial companies clear payments and engage in trade. While blockchain is still a relatively young technology, both consumers and merchants are embracing its financial applications.
The entire financial industry is increasingly focused on security, data management, and customer identification. Other trends, like biometrics, are joining blockchain to address these pressing issues. The future of banking will likely incorporate blockchain, biometrics, and machine learning to secure transactions and prevent financial crime from entering the system.
Crypto Banking Trends
In November 2017, the phrase “buy bitcoin” surpassed “buy gold” for the first time ever in Google search. This means individuals are more interested than ever before in purchasing bitcoin, even more so than they are in purchasing gold. As interest in digital currencies reaches a fever pitch, banks and governments around the world are embracing or rejecting bitcoin in different ways.
In India, banks are embracing blockchain as a part of their core financial system. In fact, The State Bank of India plans to use blockchain solutions to aid in the management of their KYC system as well as other financial processes. The bank manages over $460 billion in assets across a range of areas like retail banking, corporate banking, lending, and insurance.
In Australia, the government just invested in a cryptocurrency-related business, energy tech startup Power Ledger. The company is the first in Australian history to offer an initial public offering using cryptocurrency. They are using the Ethereum cryptocurrency network to be specific. Power Ledger also uses blockchain, the same technology that powers digital currencies, to create a digital emissions trading scheme. The company currently operates in Fremantle with hopes to expand in the future.
Japan recently surpassed the United States as the world’s largest bitcoin market, reaching roughly 50% of the global market share. The jump in rankings is a result of the Chinese government ruling to ban initial coin offerings (ICOs) and a request that trading platforms and exchanges halt trading by the end of September. Japan’s policies and later an official stamp of approval from the Japanese government helped drive Bitcoin to a record trading price of over $7,000 in late 2017.
In the U.S., about 8 states are working to pass or have already passed regulations concerning digital currencies and the use of blockchain technology. Bitcoin is also primed to receive the same financial safeguards as traditional assets. In fact, the U.S. Commodity Futures Trading Commissions has just authorized LedgerX to be the first federally regulated digital currency exchange and clearing house in the United States.
The Current BitCoin Landscape
Bitcoin kicked off 2017 with a value of $1,000 per coin. The year isn’t over and it’s already hit a record high value of $8,100 per coin, bringing the cryptocurrency’s market cap to $134 billion. The price continues to fluctuate and it’s uncertain how the digital currency will round out 2017. One thing is for certain, it’s becoming more mainstream every day. As buzz swirls around Bitcoin, more consumers and companies are beginning to enter the market. Companies that once swore off the digital currency are now embracing it.
Cryptocurrencies like Bitcoin are decentralized, meaning that they operate independent from a central authority. They are not coined or regulated by any one governing body and the value of cryptocurrency isn’t set or controlled by a central authority. Instead, the market participants determine the value through their transactions including the purchase, sale, and trading of the digital currency. For this reason, banks are still skeptical of digital currency. Banks rely on future value and since the future value of cryptocurrency is impossible to predict, they prefer to steer clear of it all together.
Most banks point to anti-money laundering (AML) regulation and the risk associated with digital currency as their reason for steering clear of bitcoin banking. Even as the price climbs, many banks refuse to work with bitcoin-related businesses. The fact that regulators don’t have a clear plan for handling digital currencies is also making banks wary. When new regulations are handed down, financial institutions are often left scrambling to keep up and roll out sufficient solutions.
Securing a Bitcoin Bank Account
Amidst the confusion and ever-changing regulation, there is one option for finding a crypto bank account. BankLine was founded to help bitcoin-related businesses secure real business bank accounts. BankLine uses a network of bitcoin-friendly financial institutions to offer reliable banking solutions that can withstand regulatory changes and industry trends.
In addition to a real bitcoin bank account, your business also receives innovative services like nationwide cash logistics. Through a partnership with TransGuardian and Rapid Armour, BankLine allows you to send and receive cash to and from any USPS-accessible location in the United States. This allows you to send and receive deposits to efficiently rotate your working capital.