After witnessing most banks’ stance against blockchain and cryptocurrencies, it shouldn’t come as a surprise that the CTO of Bank of America (BOA), Catherine Bessant, has criticized blockchain.Bessant expressed her thoughts in an interview where she stated that BOA was unable to recognize any use case of blockchain for the finance sector.
Although she portrayed blockchain in a negative way, she admitted that blockchain technology possessed the potential for practical applications and there were ongoing experiments by the BOA to explore blockchain. She also revealed having patents more than any other financial institution. In this regard, she stated:
We’re experimenting heavily, we have more patents than any other financial institution in the blockchain space, but have yet to find something that makes a difference for our clients or our customer.
Her stance on the blockchain had alerted the blockchain and crypto community who then decided to take it out on social media platform Twitter. Co-founder and partner at Morgan Creek Digital, Anthony Pompliano, a widely-known personality in the space, was among the first ones to explain that while filing patents more than any other bank is true, Bessant’s statements contradicted with the reality. He proposed that the bank staff was either confused or lying about the actual situation.
Bank of America’s CTO says they haven’t found a single use case for blockchain in finance.
They have filed more patents for blockchain than any other bank though.
Either they are confused, lost or lying!! 😂🤷🏽♂️
— Pomp 🌪 (@APompliano) May 15, 2019
Erik Voorhees, another crypto and blockchain influential who is also CEO and founder of ShapeShift, responded to Pompliano’s tweet. He sarcastically enquired if the bank considered the true use case of money that is losing its value ever since, due to inflation. While most of the community couldn’t find truth in remarks by Bessant, a user shared pictures in the thread that showed BOA’s participation in blockchain startups. He posted pictures that showed BOA as a ripple user and a member of governance advisory board for Ripple Net.
— Michael Nardolillo (@MikeNardolillo) May 16, 2019
After connecting with blockchain based startups so deeply and utilizing cryptocurrencies such as Ripple, Bessant’s latest comments are hard to believe. Zack Shapiro, former director of engineering at Bump, while expressing his opinion straightforwardly regarded everything as a lie. In his reply to Pompliano, he said:
…..They’re bankers. Of course, they’re lying.
Although it might not appear so, there’s a pattern followed by many financial institutions. At first, the institutions show severe opposition to blockchain technology but later on they adopt the very same technology and embed it in their projects. JP Morgan, the United States’ largest bank, once the biggest critique of bitcoin, embraced bitcoin’s underlying technology, blockchain, for its Inter-bank Information Network (IIN). Moreover, JP Morgan, under the stewardship of Jamie Dimon, the bank’s CEO, who was once a strong bitcoin antagonist and regarded it as a fraud, has launched a cryptocurrency of its own.
It came off as a surprise when the bank introduced digital currency JPM coin, a stablecoin pegged to USD, similar to ones it has been bashing in the past. Back then, while talking to BlockPublisher, Pompliano summarized how authorities went through the DABDA (denial, anger, bargain, depression and acceptance) phase. He said:
First, they don’t believe in digital currencies. Then they fight them. Then they say there could be a role for them to play if state backed. Eventually, they realize Bitcoin is the answer.
The International Monetary Fund (IMF) and World Bank have also similarly changed their tracks. After criticizing blockchain and bitcoin for quite some time, they both collaborated to launch a private blockchain and quasi-cryptocurrency called “Learning Coin”.
Financial institutions have been battling against blockchain and cryptos since its inception. Blockchains are decentralized, which means that they cannot be controlled by a central authority. Unlike most transactions, payments on the blockchain can’t be manipulated. Apart from that, blockchain’s most popular use case, cryptocurrencies such as bitcoin, provides a secure and cost-efficient way to users to transfer funds across the borders. Additionally, due to its decentralized nature, the threat of losing value at the hands of inflation is well catered to by bitcoin.
Blockchain has proven to be a disruptive technology. It has convincingly converted many adversaries to advocates and is continuing on its journey to mass adoption. Incidents in the path show that adopting blockchain is more of a matter of time rather than choice. Let’s see how much time is needed by BOA to realize and recognize use cases of blockchain in finance sector.