A recently published bank report by Spanish banking giant Banco Santander is foreseeing a future wherein – if bitcoin is adopted in the mainstream – the fundamental business model of credit and debit card companies could be uprooted.
A research report [PDF] was published earlier this week by Santander Investment Securities (SIS), a subsidiary owned by the Spanish banking group. The report and its findings came after an August meeting which saw SIS researchers, local investors and most notably, Mercado Bitcoin – the largest bitcoin brokerage in Latin America.
The bank-sanctioned report, titled “To Bitcoin or Not to Bitcoin?” assess what bitcoin could have in store for banks and financial services in Brazil.
In it, the impact of a future with wider adoption of the cryptocurrency and its underlying technology, the blockchain, upon various sectors of the financial services ecosystem is predicted. Card issuers and acquirers, card brands, exchanges and Brazilian banks are all taken under the scanner to see the threats or opportunities that bitcoin and blockchain brings.
Card Issuers Closest to Bitcoin’s Rising Tide
The report does not pull any punches, as researchers suggested:
Simply put, we believe a future with bitcoin transactions with their low (or no) costs and fees puts at risk the entire business model of credit and debit card companies. Acquirers such as Cielo (through net MDRs and POS revenue) and issuer banks (through interchange fees) potentially could suffer the most, in our view.
The researchers followed up their claim with a list of the disadvantages of a card payment in comparison to a bitcoin payment. They are:
- Long payout time for merchants; 30 days as opposed to 10 minutes, with a bitcoin transaction.
- The lack of card contracts, with bitcoin.
- Card fees and other middlemen costs.
- Local taxes as opposed to no taxes with bitcoin
- Operational costs from IT, back-office to process the transactions with cards.
As more merchants and suppliers accept bitcoins, “the risk increases” for card issuers, the researchers note.
Blockchain Benefits for Banks and Cards
While card issuers fall under the endangered category in a big bitcoin future, the researchers see card brands – the likes of Visa and Mastercard – to benefit from blockchain technology.
“[T]hey could benefit from the blockchain concept in order to lower transaction, IT, and back-office costs,” the report adds.
Furthermore, the report cites a Visa initiative where it is testing a payments system based on the blockchain, to process interbank transactions. The upside, compared to a traditional transfer method such as SWIFT, would be significantly faster settlement times, reducing credit risk over domestic and cross-border transfers and cost cutting.
“In our view, it is definitely a challenge to Swift,” the authors wrote.
Meanwhile, the authors of the report also believe banks have already started taking action in preparation for the cryptocurrency , even though they perceive banks to consider digital currencies’ technology to be in their “early stages.”
With this in mind, banks are already looking toward their own digital currencies such as Goldman Sachs’ SETLcoin, the report stated.
We believe the blockchain concept has the potential to redefine money transactions in the banking world, taking advantage of the power of decentralized computer networks to eliminate difficult, time-consuming and costly trading among banks. IT, transaction costs, the banks’ huge back-offices, capital requirements – all of those could change in a material way, in our view.
Altogether, the authors believe that in the future, that the answer to the report’s title, would see a response heavily leaning toward the cryptocurrency.
[W]e believe that the question in this report’s title will eventually be answered with a resounding “Yes, to bitcoin.”
Technical Analysis: NEO Jumps as Broad Markets Turns Lower
As the new waves of regulatory changes keep on hitting the segment, the major cryptocurrencies are mostly lower today. After the major update of Ethereum, and the recent surge in the price of Bitcoin, choppy conditions developed, with no clear short-term trend in most of the coins.
NEO is the best performing major today, as it surged back to the $30 level after a frustrating period that was dominated by a downward drift. The coin is now just below the key resistance level, and it could be ready to test the $34 level, with a further target found at $40. The long-term picture still looks positive, with strong support levels at $27 and $25.
NEO/USDT, Daily Chart Analysis
Ethereum is in a consolidation after the encouraging rally towards the end of last week, while Bitcoin is also correction after its stellar rise. The two largest coins pulled the rest of the majors lower, while Ripple remained very volatile after touching the $0.30 level yesterday, trading below the $0.26 again.
Litecoin, Dash, Monero, and IOTA are all a bit lower today, while Ethereum Classic found some relative strength, although it remains stuck in a declining short-term trend. All in all, the segment is still in a clear uptrend, so let’s see which coins are the most promising regarding the short-term picture.
Bitcoin Takes a Breather as Prices Drop Below $5,700
The world’s most talked about digital currency pulled back early Tuesday, a sign that the latest rally is nearing its end.
BTC/USD Price Levels
After a positive start to the week, bitcoin prices have reversed back toward $5,600 on Tuesday. The BTC/USD exchange rate opened up a nearly $200 trading range on Tuesday. At press time, the pair was down 1.3% at $5,653. Bitcoin remains in overbought territory, based on the RSI, with underlying momentum maintained.
Bitcoin’s current price level translates into a market cap of roughly $92.7 billion, according to CoinMarketCap. That nearly triples the Ethereum blockchain, which is currently valued at $31.2 billion. When assessed by market cap, bitcoin and Ethereum combined account for more than two-thirds of the cryptocurrency asset class.
The BTC/USD has registered a five-day gain of 15.%, which is equivalent to $772. The pair’s 52-week range is $627.77 – $5,861.15.
Analysts Struggle to Explain Rally
Analysts and market participants are struggling to explain bitcoin’s latest upsurge. The uptrend seems to have begun around the time of news suggesting Chinese policymakers may soon relax their ban on cryptocurrency. However, this alone doesn’t explain the 18% gain over the past five days.
Another plausible catalyst is the anticipated hard fork of the bitcoin blockchain in November, a plan that would benefit existing holders of the cryptocurrency.
The developers behind the Segwit2x protocol have identified a bitcoin upgrade approximately 90 days after the activation of Segregated Witnesses. The controversial plan, which aims to increase the transaction capacity of the blockchain, will occur at block 494,784.
Bitcoin Gold was also on some traders’ wish list before the blockchain community raised suspicion over the project. Several red flags have been identified by Gert-Jaap Galsbergen, which you can read here.
For now, bitcoin’s bull market appears to be taking a breather. As we’ve seen in recent weeks, it doesn’t take much to stoke investor exuberance in a market that has gained nearly 500% since Jan. 1.
Featured image courtesy of Shutterstock
Technical Analysis: Ripple Breaks Out Amid Ethereum Upgrade
The major cryptocurrencies are on the rise once again today, with Ethereum’s major Byzantium update being in the center of attention. The second largest blockchain network has been updated through a hard fork, as usual, and the successful lock-in led to an initial surge in the price of the ETH token. The digital currency recovered above the $330 level after Sunday’s pull-back, but so far it failed to durably break-out above the prior swing high just above $340.
With the long-term momentum readings still being neutral, the coin could be on the verge of testing the $380 resistance soon, with the all-time high near $400 being the last major technical obstacle. Below $330 further support is found at $300 and $285.
ETH/USD, Daily Chart Analysis
Bitcoin is also on the rise after dipping below $5500 during the weekend, and the most valuable coin is joined in the rally by Ripple, which most likely finished its short-term correction and could be ready for another leg higher. The other majors are also generally higher, with NEO and IOTA being ahead of the pack, while the rest of the market trading near unchanged. As the broad rally seems to be well and alive, let’s see how the short-term charts are shaping up.
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