The Potential Impact of Cryptocurrency on the Banking Industry

Running head: THE POTENTIAL IMPACT OF CRYPTOCURRENCY ON THE BANKING INDUSTRY
The potential impact of Cryptocurrency on the banking industry
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1THE POTENTIAL IMPACT OF CRYPTOCURRENCY ON THE BANKING INDUSTRY
Table of Contents
Research...........................................................................................................................................2
Brainstorming..................................................................................................................................3
Regulation and Ethics......................................................................................................................3
Disruption........................................................................................................................................4
Video transcript...............................................................................................................................7
References........................................................................................................................................9

2THE POTENTIAL IMPACT OF CRYPTOCURRENCY ON THE BANKING INDUSTRY
Research
The term cryptocurrency has been devised from the mixture of two words that are mainly
cryptography and currency. It is a form of a currency that is encrypted digitally to produce
economical assets (Böhme et al., 2015). The money generated in the form of cryptocurrencies is
used for digital transactions that are technically secured and verified. They are the digital assets
that are configured in such a way that their exchanges are cryptographically encrypted, additional
units are controlled and the whole transaction process of the assets is verified before initiation
(Iwamura et al., 2014). In the commercial world, they can be classified as a type of digital
currencies, alternative currencies and virtual currencies.
The transactional process of the cryptocurrencies is different to that of the modern
banking system. It is because the banking system is relied upon centralized electronic banking
systems whereas the cryptocurrencies are relied upon a decentralized control of transfer. This
decentralized control of transfer of the cryptocurrencies includes the presence of a blockchain
that is a public transactional database. The blockchain facilitates the transfer of the currencies
using a distributed ledger where the account of all the transactions taking place all across the
world is recorded (Iansiti & Lakhani, 2017). The information about every transaction is
forwarded to every active member of the blockchain so that any sort of discrepancy or falsity can
be avoided. This is the reason for which the system does not require a central authority to
maintain the integrity of the system. According to the protocols of the system, the system decides
whether there is a possibility of introducing a new cryptocurrency unit and if there is a possibility
of such, the system takes the charge of defining the origin of the cryptocurrency and how to

3THE POTENTIAL IMPACT OF CRYPTOCURRENCY ON THE BANKING INDUSTRY
obtain the ownership of that new origin (Ali et al., 2014). The ownership of the newly originated
unit can be proved with the help of several cryptography techniques.
Brainstorming
With the advent of the cryptocurrencies in the process of leading with the transactions,
the banking industry is being disrupted due to the rise of these digital assets through several
ways. The cryptocurrencies uses a decentralized control for the transactions all over the world
for which it is affecting most of the real world currencies. Dollar is one of those currencies that
considered as a primary source of the global economy. It has been able to mark its dominance
through centralized banking in most of the countries. However, with a decentralized control, the
cryptocurrencies have been able to disrupt the centralized banking process (Pilkington, 2016). As
a consequence to this, the international trades, relations with the foreign entities, diplomatic
strategies along with the economic sanction are largely getting impacted.
Although, it is being apprehended that due to its decentralized nature, the
cryptocurrencies are going to play a huge role in the daily life by smoothening the flow of
transactions, several industries such as the payment sectors, governments along with the banking
industry is expected to face severe challenges in adapting to the exchange of economy of the
country (Bech & Garratt, 2017). The cryptocurrency is expected to boost up the economic
growth by allowing merchants to drop in with innovative business ideas and trade points.
Regulation and Ethics
According to Lawrence Lessig there are four regulators that regulate a particular entity.
These four regulators are the law, market, architecture and the norms. The laws are set by the