The banking sector may be rushing to adopt a technology which they are not prepared to use. The rapid adoption of Bitcoin’s underlying blockchain technology by the banking sector across the world was criticized by Zennon Kapron of Kapronasia and Bobby Lee the founder of China’s leading Bitcoin exchange, BTCC.
In a recent statement, Zennon Kapron mentioned that the banks are trying to use the blockchain technology to solve a problem they don’t have. Banks started showing interest in Blockchain technology amid increasing adoption of bitcoin and bitcoin-based financial services among the masses. As the banks came to realize the potential of bitcoin and its underlying technology to disrupt traditional banking and financial services, they decided to compete with the digital currency by adopting the very technology it is built on.
Zennon Kapron was quoted by a China-focused publication saying,
“You see these banks that really get excited about blockchain and fintech. At some point over the next year, banks are going to wake up and realize that blockchain is a great sexy technology for a problem that doesn’t exist.”
Blockchain technology has already proven its potential in offering improved solutions for various operations across different industries. Even though banking is one such sector, the current technology they are attempting to use is still immature. The blockchain technology continues to undergo a lot of improvements and in the near future, there may be multiple blockchains that are global, immutable, public and open source like the bitcoin blockchain, which the banking sector really needs to create robust solutions. At present only bitcoin blockchain satisfies all these criteria and the banks are more interested in platforms other than the Bitcoin protocol, expressed Bobby Lee.
The banks are relying upon private blockchains instead of using decentralized public networks. This may also increase the risk of malicious attacks on the private blockchains, resulting in data corruption and security issues.
Ref: China Topix | Image: Wikimedia