Written by Jacob Asparian, July 15th 2022

Bitcoin for Bankers

Bitcoin is a very difficult concept to understand. I compare it to trying to explain the internet to people in the 90’s. It needs a basic understanding of computer science, game theory, money and monetary theory as well as how the current financial system works. Not a single person I know has thought Bitcoin was a good idea the first time they heard about it. Over the last few years, I am lucky to have spoken to thousands of people that have varying levels of understanding. Most of these people have no idea what Bitcoin truly is. One thing that has helped me explain Bitcoin (in addition to our 1Bitcoin.ca resources) is by trying to correlate the benefits on how Bitcoin will help them in their current career. Regardless of what you do, there are most definitely benefits, the same way the internet improved every single sector around the world.

Bitcoin will improve banking efficiency by orders of magnitude compared to the current financial system. Sending a wire transfer, sending payments anywhere around the world, is not currently a streamlined process. It takes a few business days to send and receive a wire. International wires can take more than a week. This is due to the fact that there are so many monetary intermediaries and networks that have been slapped together over the last 50 years. The beauty with using Bitcoin as a payment rail is that you can send directly to another party and have final settlement in minutes instead of days or weeks. Another issue with the current wire system is that once the bank releases it, they have no idea on the status of the transfer until the recipient receives it. Bitcoin is not only open and verifiable, but the status of every transaction is able to be confirmed in real time as well.

We are comparing Canada Post to email. It is a new paradigm.

In the next 10 years, people will not know what the term banking hours or banking days means. The stock market and banks are open 5 days a week, 8 hours a day. Bitcoin is a global monetary network that has operated 24 hours a day, consistently for over 10 years. There is no contest. 

Bitcoin is a verifiable and open monetary system that is ledger that audits itself every 10 minutes. Bitcoin is also a pristine collateral asset, it is much easier to lend against as opposed to the current system. Currently, the main collateral in the lending world is real estate. The borrower needs to have a certain amount for a down payment, certain level of credit, certain level of income. The property needs to be appraised. If the borrower falls behind on payments, it is a costly and time consuming process to take over the property. 

Bitcoin lending and borrowing is much simpler for everyone involved. There is no credit check needed. No income verification. The borrower gives the lender collateral and the lender will offer a loan for less than the collateral. This is why we call it an over collateralized loan. The borrower is in charge of ensuring the loan to value stays within the predetermined ratio. If the price of the collateral drops (as it does from time to time) the borrower will need to either add more collateral or pay down some of the amount owing. If the value drops to a certain level, the lender can automatically liquidate the holdings and the borrower will get the remaining collateral. Don't forget, is a bid on this asset 24/7 365 in every currency around the world. You can sell and cash out immediately.

Of all the people and industry leaders I speak to, finance and banking is a sector that I truly believe Bitcoin is a perfect fit for. I’m sure you must have some questions, so if you do, please never hesitate to reach out to myself or the team at 1Bitcoin.ca. We are here to help educate anyone about the benefits of Bitcoin, as we want Canada to be the leader in this new economy.