Opportunity for Banks

Bitcoin is complex. Normal people should be able to spend bitcoin as money if doing so gains them discounts, without having to create yet another banking relationship, or having to learn, install, and continuously upgrade new wallet software.

And most people have their money in banks, and bank over the internet.

Banks can help. Most online banking screens look like the one below. Adding Bitcoin would not be difficult for the consumer to understand. See the last entry.

The Bank only acts as a front end to the 3rd party Bitcoin Service Provider (BSP).

Banks can now benefit from the Bitcoin technology for two reasons:

1. Banks already have everybody as their customer.

2. Banks already have researched and complied with all the Anti-Money Laundering (“AML”) laws, and have established robust and well-functioning “Know-Your-Customer” (“KYC”) procedures.

With such a head start, banks can act as front ends to 3rd Party BSPs right away, and facilitate such transactions.

Legal Prerequisites:

- Banks will have to clear regulatory hurdles, and be allowed by the Government to pass through these transactions between their customers and the processors. Perhaps establishing an upper limit of Bitcoin holdings would go a long way towards staying within any safety guidelines.

No risk:

- Banks never need risk exposure to Bitcoin’s price volatility: The customer will be advised of and will absorb all that.

- Banks only need serve as front-ends to the BSP: If something goes wrong the customer can take it up with the BSP.

Fees, fees, fees!

- Banks can collect fixed-amount or %-based fees from their customers for converting to/from Bitcoin, higher than what it costs them to transact with the back-end BSP.

- There can be extra fees if the transaction is to happen immediately, as opposed to overnight. Waiting for overnight will allow the banks to group transactions and pass to the processor only the net amount, thus lowering their costs

Beyond consumers, a new business opportunity: Service the cash-flow sensitive industry. Click here for details.

This co-operation is beneficial to the BSPs as well, as they get access to customers who have already been vetted for AML, KYC.

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