How Blockchain Technology is Lowering Costs for the Banking Industry and Improving the Customer Experience

If you have an interest in technology and a desire to get in on the next big thing, you may be eyeing Bitcoin, Ethereum and other cryptocurrencies. These alternative forms of payment promise security, anonymity and a path to the future, and many early investors have already staked their claim.

Since the world’s first cryptocurrency was first introduced, the market has had its ups and downs. After reaching a high of nearly $20,000 a coin, Bitcoin has seen its fortunes, and its selling price, fall dramatically, and only time will tell what happens in what is still a relatively new and largely unregulated marketplace.

Banking on Bitcoin

At the same time, the technology that underpins Bitcoin, Ethereum and other cryptocurrencies is only getting better. There have already been some stunning improvements in the security and stability of the blockchain, and the technology is already transforming industries and changing the way business is done.

Nowhere are those changes more apparent than in the world of banking. It only makes sense that blockchain technology would impact the world of banking – after all, the blockchain is basically an electronic ledger, one that indelibly records payments, sales and other transactions. But no matter what the reason, the world of banking has already been improved, resulting in lower costs for banks and better service for their customers.

Facilitating Faster Payments

The processing of payments has always been a big expense for the big banks, but blockchain technology is driving those costs down while speeding transactions. Payment speed is a major factor in banking, and as transactions get faster they should also get less expensive.

The use of blockchain may still be in its infancy, but its use in banking is somewhat more advanced. Many banks realized early on just how transformative blockchain technology could be, and financial institutions have invested heavily in bringing the blockchain into their operations.

Speeding Settlements

The settlement process is the backbone of the banking industry, and it is being transformed by the adoption of blockchain technology. Before the introduction of blockchain technology, the settlement process consisted of a tangled and complicated web, and many transactions remain mired in the morass.

For other banks, however, the tangled web of recording payments and securities transactions is much simpler. Thanks to the power of the blockchain, banks now have a way to indelibly and securely record all of their transactions on a single distributed ledger, resulting in faster clearing, lower costs and greater customer satisfaction.

Improving the Customer Experience with Mobile Apps

While most of them are not built on the blockchain platform, banks have been pushing hard into the world of mobile payments. This move toward mobile payment systems is clearly an attempt to improve the customer experience, but it is also a reaction to the growth of cryptocurrencies like Bitcoin and Ethereum.

Banks are increasingly worried that they will lose customers to newer and more anonymous forms of payment, and many have compromised by offering convenient mobile apps that allow individuals to pay one another and retail customers to pay for goods and services. Only time will tell if the presence of these mobile apps will stem the cryptocurrency tide, but they are already improving banking for retail customers and expanding options for business owners.

Blockchain technology may be relatively new, but it has already changed the world in surprising ways. Bitcoin, Ethereum and other cryptocurrencies would not be possible without the blockchain, but these alternative forms of payment and investment are just the face of the revolution. What is going on behind the scenes is far more interesting, and far more durable.

No matter what happens to Bitcoin and its fellow cryptocurrencies, the blockchain is here to stay. This emerging technology is already changing the way banks operate and the way individuals save and invest. These changes are only likely to accelerate in the future, ushering in a whole new world of banking.

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How Does Cryptocurrency Work?


Few topics have received as much media attention as cryptocurrency over the last several months. Unfortunately, most of the reporting on the subject is incredibly biased. Advocates cite digital money systems as the inevitable future, and often refuse to listen to anyone who says otherwise. Likewise, opponents often bash the concept without even the slightest understanding of how it works. This article is intended to strike a balance, explaining how crypto works without the rose-colored glasses associated with promotional sites.


What A Digital Currency Is

Digital currencies such as Bitcoin (BTC) are money systems that may be exchanged for goods and services. While acceptance isn’t as ubiquitous as it is with more traditional currencies, it may be accepted as payment as long as both parties agree on its value.

Like other currencies, each crypto token’s value is in constant flux based on market conditions and several other variables. While the American dollar has an established government and the Federal Reserve system that govern the available money supply and inflation, most cryptocurrencies have no centralized regulatory authority. This means that price swings are less predictable, enticing some with no interest in spending crypto to purchase it as an investment.

How Does It Work?

Most crypto transactions are stored on a blockchain, or a public ledger. The blockchain is kind of like your account history at a bank, except that it includes every transaction for a given token instead of one consumer’s. The fact that the entire thing is public knowledge means that anybody who wants to can trace a given coin’s history through every account that it has ever been in.

The term blockchain comes from the structure of the ledger. Data is recorded electronically on “blocks” that fill up eventually, just like an SD card that you store pictures on. When one is full, the next is “chained” to it such that the information on the full block may still be accessed. This allows miners toverify that every transaction agrees with those that came before it, reducing the potential for fraud.

Every transaction on the blockchain includes three bits of information: Input, Output, and Amount. The Input is the most confusing of the three. It lists the source of the tokens transferred, not the account that is transferring them. For instance, if Kyle gives 100 BTC to Bob that he originally received from Pierre, Pierre’s Bitcoin account is listed as the input of the Kyle-to-Bob transaction. It’s somewhat counter-intuitive, but this system of public accountability makes it difficult for one party to add unauthorized coins to the blockchain. The miners mentioned above use powerful computers to verify that all the coins involved are coming out of the accounts they are supposed to be in.

The other two data points are easier to understand. The Output is the account that receives tokens in any given transaction. Finally, the Amount is how much money was transferred. Notably, Bitcoin’s blockchain is capable of processing transactions as small as 0.00000001 BTC. That’s typically much less than an American penny, allowing for microtransactions that standard currencies cannot support.

What Differentiates Tokens From Each Other?

First, each crypto token has its own dedicated blockchain with some variation. Ethereum is notable for its programmable blockchain, allowing developers to concentrate on a single platform for all of the innovations in the space. One of its coolest features is the ability to create a “smart contract,” or a conditional payment that automatically executes itself once the conditions are met.

Different blockchains also have different processing times. For example, Bitcoin’s blockchain can handle 3-7 transactions per second, depending on the mining resources available. Some in the crypto community feel that this is too slow, advocating for a switch to larger blocks to make transaction processing more efficient. These individuals were appeased on August 1, 2017, when a Hard Fork permanently split part of Bitcoin’s blockchain into Bitcoin Cash, a coin identical to Bitcoin save for faster processing times.

Finally, each coin has a different circulation. Bitcoin’s source code calls for a grand total of 21 million BTC to be released, while another token called Ripple (XRP) has a much larger planned circulation of 100,000,000,000 XRP. The greater supply might make Ripple more viable as an everyday currency, but investors tend to prefer the larger profit potential offered by Bitcoin’s scarce supply.

What Are The Downsides?

While blockchains are difficult to hack into, it’s not impossible. Many crypto holdings are stored on sites called Exchanges that facilitate the crypto-economy. In 2014, one popular platform called Mt. Gulg disclosed that hackers had been siphoning off funds deposited by their customers for years, totaling $473 million in digital assets. Most exchanges lack any kind of insurance, so you could be out of luck if this happens to you.

Some exchanges are also designed by scammers to steal from the unsuspecting public. For example, a platform called Bitconnect was shut down in January 2018 for ripping off its customers, with the masterminds behind it arrested for their crimes later that year. Individual “experts” may also purchase a cheap coin before hyping it up to inflate its market value, turning a profit at the expense of the suckers who trusted them.

In addition, crypto transactions are processed much more slowly than traditional ones. Visa can handle 24,000 transactions per second, putting any crypto to shame. Customers usually don’t want to wait, making the faster process much more popular for everyday purchases.

Parting Thoughts

Cryptocurrency is a fascinating phenomenon that only figures to grow in the public consciousness as the underlying blockchain technology improves. Many books have been written about all of the particulars, but the synopsis above should be enough for most people to decide whether crypto is right for them.

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How Much Do You Know About Cryptocurrency?


The first cryptocurrency transaction occurred in 2010 when Laszlo Hanyecz ordered two pizzas from a pizzeria in Jacksonville, Florida. Shortly after that, the value of the cryptocurrency increased substantially from .008 cents per bitcoin to .08 cents per bitcoin. As of the time of writing one bitcoin is worth 6,215.15 USD. The explosion of bitcoin, and other cryptocurrencies, quickly garnered the attention of the financial world, and, eventually, mainstream society. Today cryptocurrency is a hot button topic. Everyone from Bill Gates to Warren Buffet to Jordan Belfort has weighed in on cryptocurrency and whether or not the world has room for yet another currency. 

With so much mainstream attention on a concept that is in its infancy, many myths have been passed off as proven fact;  however, and many of the myths that are touted around as absolute truths aren’t. 

Myth: Cryptocurrency is only hype 

The Truth: Jordan Belfort, the former stockbroker whose shenanigans were the main plot for The Wolf of Wall Street, argues that cryptocurrencies popularity is based only on a theory known as “the greater fool theory.” In this theory, the price of an object is inflated not by its intrinsic value, but rather by unfounded belief that another person is willing to pay more for the item. Belfort’s statement about Bitcoin and other cryptocurrencies can be attached to pretty much any commodity. After all, the basis of every investment is that another person will pay more for it at a later date. That is the entire concept surrounding the real estate market. 

Cryptocurrency is new. Yes, it is a volatile investment, but blockchain technology is here to stay, and with it, cryptocurrency is likely to have a more significant role in financial society as the time marches forward. Whether or not you are willing to take a risk on such an investment is a personal decision, but the risks associated with cryptocurrencies are similar to the risks associated with more mainstream investments. 

Myth: Cryptocurrency is only for criminals 

The Truth: Cryptocurrency has a variety of different applications. Sure, the believed anonymity has led to its use by criminals initially, but the majority of transactions are for relatively mundane purposes. Studies have suggested that about one-quarter of cryptocurrency transactions may be for illegal activities. However, cryptocurrency has not increased the number of black-market sales;  it merely serves as a different payment method. The use of cryptocurrency by criminals does not mean that cryptocurrency is only for criminals. Traditional cash exchange hands for illegal goods and services, too, but that doesn’t suggest the United States dollar is just for criminals. 

Myth: You can’t use cryptocurrency to purchase mainstream goods 

The Truth: Cryptocurrencies, while not accepted everywhere, are beginning to be recognized by more and more mainstream retailers. REED Jewelers accepts bitcoin in all 65 of its brick-and-mortar locations, as well as online. Overstock ( allows shoppers to pay using a variety of different alternative currencies. Even major chains, like Subway, have given Bitcoin and other cryptocurrencies a shot, although these promotions are usually limited to specific locations and franchises. 

On top of some companies offering shoppers the option of using cryptocurrency for purchases, some companies allow users to transfer cryptocurrency into traditional currencies or gift cards. Cryptocurrencies are still in their infancy, but financial experts admit that the concept is here to stay. It is likely that as cryptocurrencies become more established, more retailers will begin accepting them as payment. 

Myth: Cryptocurrency is a flash in the pan, it won’t be around in a few years 

The Truth: Cryptocurrency was invented, somewhat by accident, in 2008. Pseudonymous inventor or inventors, Satoshi Nakamoto first developed the concept as a peer-to-peer electronic payment system. Since then, Bitcoin has grown much more significant and has seen its applications continue to grow. New cryptocurrencies continue to pop up. It doesn’t appear to be an end in sight, not as long as people are interested in utilizing decentralized currency. When considering the current social and political climate, it looks like cryptocurrencies are in no danger of becoming extinct, especially not as larger companies are beginning to acknowledge the payment method. 

Myth: 1,000 people currently own 40% of all Bitcoin 

The Truth: Naysayers will argue that bitcoin is just as bad, if not worse, at creating a disparity between the rich and the poor as traditional currency. Those same naysayers point to this statistic to point out the gap, but the general public doesn’t know how bitcoin wealth gets dispersed, and the anonymity of cryptocurrencies ensures the public will not. You can look at the breakdown of bitcoin wallets and attempt to draw a parrel between the size of the wallet and the way cryptocurrency wealth is split up, but one wallet may hold thousands of different users details, while one person can have 100 different wallets (if they want). It is impossible to figure out who wallet holders are, and how the wealth within them is divided.  As cryptocurrency grows, and the spotlight on the concept continues to shine, everyone will learn more about how Bitcoin and other cryptocurrencies fit into the current financial landscape. Cryptocurrency isn’t much different than other, more established investments, in many ways. As an investor, you hope that the value of the object continues to increase so your investment pays off.



 There is nothing strange or sinister, or even new, about that concept. Over time everyone will learn more about cryptocurrency, and its price will likely become more stable in the coming years. As it stands, however, cryptocurrency and the blockchain technology it employs are an exciting innovation, and several sectors are keeping their eyes glued to developments. If you can stomach the idea of a volatile investment, it may be worthwhile to learn more about cryptocurrencies and how the technology behind it works. 


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