Day after day Bitcoin is spreading further into financial institutions. However, if the banks were going to integrate their systems with Bitcoin, what role would the major international cryptocurrency markets play then?
There is an opinion that in order to escape extinction the current BTC trading platforms (or what would left of them) have to move their business accent onto becoming Bitcoin clearing houses.
Using a definition from Wikipedia: “A clearing house is a financial institution that provides clearing and settlement services for financial and commodities derivatives and securities transactions.”
The bottom line – a clearinghouse works as an intermediary to organize security deals.
Now that we got the definition out of the way, we can get back to the reason why exchanges are about to lose their niche. First of all, the Bitcoin is much more dreadful for Central Banks then it is for the normal retail banks. The latter on the contrary can use digital coins to gather more support for themselves and for cryptomovement. A win-win situation, where banks and classic financial systems do not look like comic villains in the eyes of the cryptocommunity and Bitcoin itself would receive a much better publicity if it were associated with respected financial institutions.
Of course, there would be hardcore fans of the original design by Satoshi Nakamoto, who would leave the Bitcoin and use another altcoin that would have not “discredited” itself by its connection to banks. However, the client base of the financial institutions would have cover this loss with ease.
Banks have already been in the business long before the Bitcoin was even possible. They showed that they can operate finance on any scale, and keep the money safe and sound. Exchanges do not guarantee such a thing.
Actually, cryptocurrencies do not hold any guarantees. There is no way to get back your money if anything should happen. A lot of mechanic is built on trust. Hell, even the price is keeping itself together only while people are using the cryptocurrency, if by some reason people started to sell their digital actives back to fiat, then the price would be spiraling down as a maple seed, until it hit the bottom. After a fall that fast and hard, not much would be left of Bitcoin.
The small local exchanges on the other hand are much easier to adapt to the new situation by merging with banks. These minor businesses know the drill and are much more mobile than the large BTC trades. The first such coalition came to live in the summer of 2013, before the Bitcoin rocketed to the price of $1200, but after it showed its fangs by reaching $260 on Mt.Gox for a day. The German Bitcoin.de has been “reqruited” by the Fidor Bank as the latter’s official representative in trading Bitcoin in Germany. Sometime later, the mentioned Bank made a deal with Kraken Bitcoin exchange. That way, the exchange became Fidor’s platform in EU for trading the Bitcoin.
The recent event also does not gives much hope towards the survival of the cryptocurrency markets as they are now. The largest bank, operating in Africa – Standard Bank, has successfully tested Bitcoin exchange platform integrated into their system. Although the pilot run was only among the employees of bank, the system made by Switchless (software solution developer) works.
However, as I said before there is a new continent for big exchanges to travel to. The banks growing branches acclimatized to Bitcoin would need a trading desk with expertise and multiple high profile offerings, transforming BTC markets into successful operational clearinghouses.