The banking system is inefficient in its current state as it requires the use of multiple third-party verifications and transferring services in order to complete a transaction. Blockchain can alleviate the need for these organizations and provide the world with a viable solution to the inherent problems facing the banking community. Blockchain is transforming the way in which we conduct business globally by offering us the ability to perform transactions securely in a peer-to-peer manner without the need of any middleman.
The current state of the global banking system is shabby at best. We've already witnessed multiple government bailouts to date and it is exactly this type of pompous behavior that spawned the birth of cryptocurrencies nine years prior. Satoshi, the unknown creator of Bitcoin, was even kind enough to let us know that this was his motivation by leaving a reference to the bailout headlines from the London Times embedded in BTC's genesis block – The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.
A Brief History of How Banks Came About
To understand the advantages that blockchain has over the current banking system, you need to understand the history of banking.Banks evolved out of the need to securely store gold. The first “banker” was nothing more than a gold depository for wealthy people.
Individuals would drop off their gold and the banker would then issue them a receipt that could be used to purchase items around town. Eventually, the banker realized that the people never all came for their gold at the same time and so he decided to start lending out other people's gold at a slight mark up or interest rate.
The people eventually became suspicious of the banker's quickly expanding wealth and one night the banker was cornered by a furious crowd who accused him of spending their gold. They forced the banker to take them to his vault and show them that he had everyone's gold. He gladly obliged as he not only had all of their gold but he now had the interest he made in profit as well.
