Moreover big financial institutions including Banco Santander (NYSE: SAN), JPMorgan Chase (NYSE: JPM), BNY Mellon (NYSE: BK), and Goldman Sachs (NYSE: GS) are researching or developing cryptocurrencies. Finally, even Facebook (NASDAQ: FB) is setting up an entity that looks like a bank, the Libra Association, to operate its proposed Libra cryptocurrency.
Consequently, the blockchain is the bank of the future. To explain, in a few years you could do most of your banking through the blockchain. For instance, you could send cryptocurrency remittances to relatives overseas, get paid in stablecoins, and invest in cryptocurrencies through your bank account.
Finally, you could use your bank’s app to convert stablecoins to paper cash at the ATM, or buy groceries. Thus, blockchain will become part of the banking system soon.
Under these circumstances, speculators will ask what potential value banking cryptocurrencies have? Currently most of the banking oriented cryptocurrenceis on the market have little value.
For instance, Coinmarketcap gave BABB (BAX); which calls itself “a bank on a blockchain,” a Coin Price of 00.012₵ on 12 July 2018. Additionally, Coinmarketcap estimates BABB had a Market Capitalization of $2.53 million and a 24-Market Volume of $2,383 on the same day. However, Coinmarketcap estimates there was a Circulating Supply of 20.999 million BAX and a Total Supply of 50 million BAX on the same day.
Meanwhile, Nexo (NEXO) had far more value with a Coin Price of 10.06₵ and a Market Capitalization of $56.322 million on the same day.
There was also a 24-Hour Market Volume of $6.482 million on 12 July 2019. CoinMarketcap estimates there was a Circulating Supply of 560 million NEXO and a Total Supply of 1 billion NEXO on the same day.
Thus, Nexo is creating some value with its line of credit that allows instant borrowing in over 45 Fiat Currencies. To explain, Nexo is a cryptocurrency lender that lets you borrow against cryptocurrency. However, Nexo operates like a bank because it claims to have $100 million in insurance on custodial assets.
Interestingly, Nexo appears to be making money with basic lending services. The success of Nexo proves that you can make money with banking blockchain.
Moreover, Banco Santander proves you can send cryptocurrency border payments. Santander is experimenting with Ripple (XRP) cross-border payments in Spain and the United Kingdom. Meanwhile, Ripple is trying to become a banking solution with a cross-border payments network linking several countries.
One purpose for cross-border payments is to send money to people in countries with no banking infrastructure. For example, developing nations in Africa, South Asia, and Latin America for instance. A lucrative use of such payments could be for remittances.
A remittance is an electronic payment, usually a wire, an individual sends to somebody in another country. Remittances are now big business, the World Bank estimates the volume of remittances went for $633 billion in 2017 to $689 billion in 2018. Additionally, the value of remittances; $462 billion, sent from middle income to developing countries exceeded the amount of foreign aid $344 sent to developing countries in 2018, the World Bank calculates.
Other uses for banking blockchain could be for people to borrow money from banks in other countries. For instance, a person in Kenya could borrow money from an institution in the United Kingdom.
However, the infrastructure to deliver such services between countries does not exist yet. Yet both Facebook and Ripple are trying to build such infrastructure. Project Libra; in particular, looks like a blueprint for a new global banking infrastructure.
In conclusion, I think Blockchain banking will make a lot of money. However, I think they will need to spend tens of billions of dollars for year;s or decades, to build the infrastructure to build a blockchain banking network
Under those circumstances, I think will be several years until blockchain banking makes money. Thus, I advise speculators to leave blockchain banking to giant financial institutions and put their money elsewhere for the foreseeable future. Blockchain banking could be a huge industry, but right it only exists in theory.
Originally published at https://marketmadhouse.com on July 12, 2019.