In the 80s, I heard about a “convergence theory”, according to capitalism and socialism was supposed to converge. Socialist countries realized their economies aren’t really effective and were applying capitalist production methods. Like allowing the small entrepreneurs to make businesses or farmers to cultivate their own land pieces.

The future is for the hybrids?

At the same time, Scandinavian countries like Sweden, perhaps also Germany was building a socially very sensitive society, in such high levels which seemed to be half-capitalism and half-socialism. The theory was, socialist countries are evolving more capitalists and capitalists getting more socialists. So the two systems can converge, be mixed in the future. (I think some forms of this theory may exist until today. more)

We know socialism in their hard form fell in Europe. But I have my own convergence theory about cryprocurrencies and traditional financial system. I think this two realms can converge and create something new, hybrid, mixed forms. Why?

Horrible experiences

Allegedly about 20 percent of all Bitcoins in circulation were stolen at least once already. Did you ever handle offline, paper wallets of cryptocurrencies? It’s a horrible experience. Were you robbed, hacked or are you afraid of this? Can you imagine your grandma paying with crypto?

Most people are agreed: Cryptocurrency space needs a “Netscape moment”, secure and comfortable paying solutions and services. About 90-98 percent of the people aren’t prepared to handle this type of transactions and security protocols.

User-friendly, please

We need very user-friendly and comfortable solutions to reach the desired “mass adoption”, something similar like by the internet banks of the traditional financial system. Paying with cryptos shouldn’t be more complicated than with a credit card or mobile payment system, Paypal or competitors.

(Photo: Pixabay)

Banks and other financial services providers are trying to fulfill the needs of the people to earn money. They spend hundreds of billions of dollars in research. Why shouldn’t crypto-companies, “crypro-economy” learn from them? It would be a simple wasting of resources to ignore them and investigate the same problems again and again.

Intelligent dinosaurs

On the other side, traditional banks and other financial institutions are old, big, slow, fat dinosaurs, but not stupid. If they see something new, a new competitor, a modern technology, an invention, they are trying to buy it, use it or develop something similar. They aren’t fools to wait until cryptos conquer the world. And they have a lot of capital to make developments.

If you can’t fight them, you may as well learn from them
– are wise leaders saying. (source)

Central banks experimenting

Many banks, also central (national) banks are mirroring the progress in cryptocurrency and blockchain industry, much more than you think. For example, a BIS report in January showed 70 percent of central banks are studying cryptos, many of them making experiments with them. (BIS is the international “bank of the central banks”, the report can be seen here.)

24/7/365

One important sign of this convergence is, in my humble opinion, the accelerated development of the instant paying system. In the complicated language of the bureaucracy of the European Central Bank:

The Euro Retail Payments Board (ERPB) has defined instant payments as electronic retail payment solutions available 24/7/365 and resulting in the immediate or close-to-immediate interbank clearing of the transaction and crediting of the payee’s account with confirmation to the payer (within seconds of payment initiation). source

That means, in human language, one of the main advantages of the cryptocurrencies is stolen. The capability to send money within seconds or minutes to other countries, 24 hours a day and 7 days a week, 365 days a year, can be reached in the conventional banking system. (At least in the European Union.)

Patents of the multinationals

Another sign of this convergence is that many-many patents on the terrain of cryptos are registering traditional banks, credit card companies, tech-giants. Companies of the “old economy”, trying to make blockchain or crypto solutions to make their business.

Supposedly, billions and billions of dollars could be saved in the traditional finance system with these solutions, so why shouldn’t they apply them? It is their obligation. The job of the managers of these companies is to make money, lower costs, maximize earnings, so it’s mandatory for them to advance in this direction.

How will all this end? Who will be the leader? The blockchain? The cryptos, dApps? Bank giants? I don’t know. But you can’t understand the future without watching all of these players. Don’t be blind, observing only the crypto space or only the traditional banking.

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