Banks Versus Crypto: The Race Is Heating Up

The banks are not going to be left out in the cold.

We knew this would happen. The banks were going to put up a fight, inserting themselves wherever possible to maintain control of the global monetary system. This is pitting it against cryptocurrency, something that offers the ability to transact without financial intermediaries.

Naturally, this is a threat to the established institutions. For this reason, they are doing whatever they can to incorporate themselves into the process.

We are starting to see them embrace blockchain as a mechanism for their operations. This does not mean public blockchains but, rather, the technology itself.

Image created using Ideogram

British Banks Banding Together

We got a press release announcing the new UK Regulated Liability Network (RLN). This is going to be an innovation platform experimenting with different forms of money utilizing blockchain.

There are well known firms involved. Here is the list:

Barclays, Citi, HSBC, Lloyds Banking Group, Mastercard, NatWest, Nationwide, Santander, Standard Chartered, Virgin Money and Visa

The idea is to offer payments, transact, and settle liabilities across a digital networks.

This does include commercial bank deposits. We also see the idea of integrating with the digital pound if that is created.

Mirroring The Existing System

We are seeing nothing more than a recreation of the existing system. It is interesting to watch then try to maneuver technology to fit their needs when it actually goes beyond them.

To start, with the introduction of a bank digital currency, there is no need for two ledgers. All payments and transactions could occur on the "central bank" ledger. If the digital pound is recognized as legal tender, which it would be, then why do you need the commercial bank ledger? The answer is clear.

Of course, the Bank of England is going to protect the commercial banks. If it doesn't they collapse and go out of business. Without deposits, banks cannot do anything. Their product is gone.

What we are seeing here is a replication of the two-tiered banking system we see today. At present, money is moved between commercial banks, altering the ledger of each. Then, settlements are done between then at the central bank level, which maintains a ledger of all member banks.

It appears this experiment is looking to build a digital ledger, one which would end up on top of a CBDC ledger, just incorporating more entities. Instead of simply having the ledgers of banks individually, the transactions would include all parties, including payment entities such as Visa and Mastercard.

By the way, the two entities are no longer needed in a world of ledgers and crypto.

Integration of Crypto?

Could this system include cryptocurrency?

If that was the desire of the participants, it could be integrated. Of course, this brings up the question as to why? From the banking perspective, it is obvious. The banks are looking to stay relevant although I am sure they look at it differently.

What is important is what benefit does the user get? Why is there a need for something like this? At this point, since infrastructure is not built, it becomes clear. However, if Web 3.0 starts to evolve as many envision, the components will be in place to conduct all kinds of financial transactions without the need of the banks.

According to the press release, here is what they are experimenting with:

The UK RLN experimentation phase will focus on the following use cases:

  • Payment-upon-delivery for a physical product, aimed at reducing fraud in online marketplaces.
  • The process of buying a home, improving customer transparency, and mitigating conveyancing fraud.
  • A digital bond settlement, to connect digital customer money to digital assets.

Most of these are topics we discussed repeatedly in articles. Why is this network required for buying a home? To provide that service we simply need a NFT, digital escrow account, and a lending platform. Certainly there are regulatory matters since governments are involved in the record keeping. Nevertheless, over time, that is likely going to end up on public networks.


To their credit, the banks are use to competing. While they do own a monopoly, they do understand what it takes to keep pushing forward. They would not have survived this long if they did not.

However, what cryptocurrency and blockchain is doing is to create a new form of competition. This no longer is about finance or the institutions involved. Instead, we are dealing with the open versus closed debate.

The banking industry is under attack from every Web 3.0 developer. Whatever is being created that incorporates or is tied to payments, transactions, or tokenization is a potential threat to the banks. In this regard, Bitcoin, Ethereum, Hive, TRON, and Cardano are all on the same side. While there could be disputes among them, we are seeing the tentacles extend into many different areas.

Also, the banks are trying to operate in the financial arena. Here is another area of downfall in my opinion. There is no financial, social media, or commerce.

Instead, what we are simply dealing with are networks. This means data, nodes, compute, and applications. monetary systems have nothing to do with money. They are digital networks penetrating every aspect of the online world.

This is something Elon Musk is undertaking. By looking to offer payments and other financial services on X, he is utilizing this concept. Other non-financial entities are going to follow along.

A ledger on a digital network is a monetary system. The form of money riding on top can take many different forms. That is really secondary to the system itself.

Hence. the British banks are looking at something that is likely permissioned. To me, this is a rather limited network. From this perspective, it cannot stand up against something that is global, permissionless, and being built upon by many around the world.

This is why Web 3.0 is so important. It is also crucial to realize that cryptocurrency is just a small part of it. The banks are trying to fight crypto when the battle is at a larger level.

What Is Hive

Posted Using InLeo Alpha


I think this is actually a good move for banks. They see the threat of crypto and are trying to adapt. CEX and DEX have fees, so I can see banks and this new setup offering something similar. They see how those exchanges are profiting and they want to a piece of that pie. Since these names are known by the public, they will also go under the guise of security and stability.

My latest article expands upon this.

The banks are not even fighting the right battle. They are in the wrong game. Elon is showing this but Web 3.0 takes it to a completely level.

The idea of monetary systems evolving into digital networks aligns with the broader trend towards digitalization and decentralization. Elon Musk's exploration of offering financial services on X highlights the potential for non-financial entities to enter this space, recognizing the importance of digital networks in facilitating transactions and interactions.

In essence, the battle between traditional banking systems and cryptocurrency represents a larger struggle over the future of digital networks and their role in shaping global financial ecosystems.

I just wrote a follow up. The banks are done because they are not even fighting the right battle.

I always figured that if the battle between the legacy system and decentralized crypto went long enough, the banking/financial system would end up at an "if you can't beat 'em, join 'em" crossroads where they would simply create their own "versions" of crypto/blockchain and do their best to obfuscate the actual differences between "them" and "us" to such a degree that 95% of the greater public would declare "I'm in crypto" when — in fact — they are still in Barclay's or Bank of America's pocket.

Maybe the time has come for the actual crypto movement to stop "selling crypto" as an idea, and instead sell "the importance of decentralization" because otherwise we're moving down a road towards little more than the status quo, albeit wearing "fancy new dress."

Web 3.0 isnt cryptocurrency. Here is where I think a mistake is made. It is only part of the transformation...actually a small part.

Hence the focus there is missing the elephant. It is why the banks are done. They are fighting the wrong battle.

Banks versus crypto; centralization versus decentralization. The war has just begun and I believe it will heat up the more. I'm not too sure banks will win this time because we all appreciate decentralization.

If we look at Web 3.0, we can see it is actually none of them.

Banks simply dont have the technology or the infrastructure to let the services go through decentralized gates. Some of the policies of banks arent that good and what they do frequently is to steal money and let their own revenues grow.

In such circumstances, smart people are way to busy to transact their financial needs by web3 channel and already good payment methods are set up. Hopefully more stronger dapps would be there, helping the process move easy.

I am looking for that to come.

The banks will always try something similar to crypto and blockchain yet almost will not be good enough at this stage. What is centralized is centralized and so also is what is permissionless.
Blockchain as you said is growing beyond just finance and this is a hedge against banks.

I do love your articles, I just have a single question, the elimination of banks will actually take off measures used by the government, how will this affect taxation on a broad scale?.

It's been proxy war between decentralization and centralization with lots to gain from the former.
Decentralization has come to stay