BiTPAL

Swiss Bank offers bitcoin investments

The logo of Swiss Falcon Private Bank, owned by Abu Dhabi's International Petroleum Investment Co (IPIC), is seen at its headquarters in Zurich, Switzerland September 22, 2016. REUTERS/Arnd Wiegmann

Zurich-based Falcon Private Bank has become the first conventional bank to offer to sell bitcoins to its affluent clients.

The Swiss investment firm has made it possible for investors who use its boutique banking services to request that bitcoins are added to their portfolio. The bank will then purchase and store them for the investors. This move adds validity to the belief that cryptocurrencies will enjoy longevity and could become an increasingly attractive investment opportunity.

Falcon Private Bank announced this new service in response to queries from investors interested in exploring the digital coin market. Acting as an intermediary on behalf of its clients means the bank can not only offer convenience – they can also use their professional insights to carry out the buying and storing of cryptocurrencies. This way even a novice client, exploring the market for the first time, can invest with a degree of confidence.

To move into this field, Falcon Private Bank sought and gained approval from the Swiss financial authority, FINMA. This could be the start of more interest and involvement from traditional financial operators, throwing the spotlight on to data security issues. As more potential outlets for bitcoins become available – from organisations relatively new to cryptocurrencies – cybercriminals may find ways to seize the opportunity to hack into coin stores.

Decentralised system protects bitcoins

It means new operators in this market must explore ways to retain the integrity of the decentralized systems already inherent in cryptocurrencies. This includes using a network of computers to validate bitcoin transactions. All amounts are recorded on a blockchain – a form of digital ledger. As the digital coins change hands, the blockchain is copied and shared too. The complex mathematics involves makes it extremely hard to fool the system or engage in illicit dealings.

Individuals keep their bitcoins in “wallets”; all part of the decentralized processes within this market. As system serves to fragment and spread risk, it also means hackers can gain little or no access to large stores of bitcoins or wallets.

So, as traditional suppliers of investment services get involved in cryptocurrencies, the level of security they use to protect large stores of digital coins will have to match the assurances to be gained from individual involvement in trading.