With no buildings, no employees, and everything transparently run by protocols, a future of virtual reality banking is fast approaching. Is a bank always a bank, even if it sprouted up online?

The history of banks is not long. In fact, it hasn't been that long since a signboard was first hung up on a bank building and employees started to systematically do the many administrative tasks in the bank office.

Even before modern banks as we know them were created, there was always the need for some form of bank. There used to be an abundance of loan sharks who connected people who needed money with those who had excess money. These private lenders were criticized for their high-interest rates and were accused of bleeding people dry.

Shylock, the infamous loan shark in Shakespeare's "The Merchant of Venice," is a figure who, in turn, made the Renaissance possible. The financing deals he made were the lifeblood of the economy. Also, with all of the wealth that was then generated by the powerful Medici family, they needed some kind of bank.

Simply put, without a bank, the economy cannot run smoothly. The industrial revolution was possible because it could supply large amounts of capital. The same was true of the information revolution.

The use of money made modern banks possible. The bank set off as a warehouse for goods. However, realizing that there was no benefit to keeping their money lying dormant there, they started lending it out, which led to substantial multiplier effects.

The key to finance is credit. The bank provides loans with invisible credit as collateral. Customers build credit by paying back the money they borrowed by a fixed date.

With the creation of credit cards, people realized that they could live without cash. This was further confirmed by obtaining items online, such as online gaming items that were worth the money. Digital natives have grown up recognizing the value of digital intangibles.

With the advent of smartphones and mobile banking gaining ground, there is even less need to use cash. In addition, we can check our balance, automatically transfer utility bill payments and even get a loan without having to go to the bank.

The bank has become a place to visit once to verify one’s real name. Of course, people also go to the bank when they exchange money. The bank is also the place where older customers with heavy deposits go when they want to have free coffee in a modern setting. 

When a company opens a letter of credit, it must go to the bank, so banks still have an important role to play. However, the number of employees required to operate banks is gradually decreasing. Moreover, a decisive blow has been dealt to the banks with the emergence of cryptocurrency and decentralized finance.

Cryptocurrency can be transferred without a bank and is recorded in a ledger called a blockchain, which can be viewed by anyone.

It's a kind of money but is not issued by the central bank. Over the past decade, cryptocurrency has been steadily creeping into the market, despite the fact that many are suspicious of it and refuse to admit its existence.

Cryptocurrency as we know it today may not be a successful model for futuristic finance. However, it will probably become a precursor to a future form. This would be analogous to when the Internet first came out, few people thought it would become an Amazon or Google platform.

Extrapolating from our past experience with the evolution of the internet, we can anticipate that today’s cryptocurrency will eventually play a deepening role in a future cashless society and possibly even develop into some form of a ‘bank without a bank’. All things are possible in this new open world of decentralized finance. 

Kim Hyoung-joong, Chief Editorial Writer 다른기사 보기