Blockchain and Banking: Can The Two Co-Exist?

Rapid technological innovation around the world is highlighting some interesting splits and divisions in modern societies. National governments tend to move forward with some level of complexity. Their officials are not necessarily technology-inclined, and hidebound state systems face challenges adapting to a rapidly evolving digital world: it takes time to change the course of the ship of state.

Scientists are well familiar with the philosophy that change is not often consistent and universal, that systems do not typically move in lockstep, and that it often takes some level of detail to assess how larger systems work as a whole.

This is abundantly the case with the global economy that is rapidly assimilating fintech tools offering new innovative ways of doing business – blockchain, for one. Traditional banking systems have to find a way to accommodate change – including the trend toward digital assets and blockchain ledgers. XAR Network is deeply involved in this process, helping stakeholders to bridge the divide between existing finance mechanisms made for fiat currencies, and new exchanges and environments built for the blockchain. 

Cryptocurrencies and blockchains and related technologies are entering our lives in new ways every day. On the other hand, though, many global citizens are clinging to their cash and have not joined this digital revolution. There is, of necessity, a consideration for the business of using “cold hard cash,” a tradition that is practically as old as human societies.

New York City Cashless Business Ban

Recent reports show that New York City officials have resolved to fine businesses that do not accept cash payments, citing lack of digital participation by minors and the un-banked, and suggesting that an entirely cashless society is not especially fair or practical to those who still prefer using physical money.

Meanwhile, there’s a debate going on between digital asset fans on one side, and traditionalists on the other who would prefer to keep fiat national currencies as the main way of doing business.

 In fact, some of the fiercest proponents of cryptocurrencies and those arguing the loudest for the obsolescence of fiat currencies use the example of the unbanked to their favor, suggesting that a newer, more effective currency will more capably take these citizens on board.

One of the biggest criticisms from traditionalists, though, is the volatility and the speculative nature of coins. These digital assets, they argue, are not backed by anything like a national economy. Sure, fiat currencies can fall victim to tweaking by central banks, or experience hyperinflation or other problems because of public policy, but there’s still the abiding idea that at least the national fiat currency is supported by a commonality of millions living in the same state, assumedly with a range of shared interests.

A New Way Forward

To some innovators, this debate highlights opportunity and potential – that there is a synthesis between the old way of doing business and the new way of doing business that will resolve these conflicts.

That’s where XAR Network comes in – by building on earlier efforts, including the use of the first blockchains to help to make old and new finance mechanisms interoperable, XAR is connecting many of the new systems with digital backing to the older ways of doing business, for synergy that will soon become evident in consumer economies. Much of that involves building of the trust that needs to be in consensus-backed transactions and building on-ramps for the cash-carrying unbanked to join the digital finance world. Alternately, systems still have to accommodate the un-banked and the traditionalists, because end-of-life processes that wash our hands of traditional cash are not going to be practical.

Specifically, decentralized finance and consensus-based finance tools will be able to bridge the gap and move these disparate parts of the global economy together.

By leveraging both the established value of fiat currencies and the flexibility of blockchain systems, there are many ways to bridge the divide and create new ways of doing business.

What Do These Solutions Look Like?

For a glimpse into this new world of interoperability, look no further than the Bitcoin ATM. Utilizing a familiar conveyance of fiat currencies, these kiosk tools are opening up market opportunities to anyone on the street, not just big investors with brokerage tools. This is just one example of the concept that is bringing blockchain-based systems into the lexicon of central banks, and even into the territory of the “everyman,” as crypto becomes a more mundane part of our daily lives. Blockchain and banking definitely can go together – the question is how to build the right versatile frameworks and services that are going to draw these different fields together.