The first wave of $1,200 payments to American workers who have lost their jobs because of the coronavirus pandemic went out on April 15, but quite a few major banks were not able to handle the flurry of deposits and inquiries by online banking clients. PNC, Fifth Third Bank, and US Bank were just some of the financial institutions affected by the massive amount of queries, logins, and transactions from their clients.
In some cases, online banking outages extended more than 24 hours. Ally Bank, an institution created by federal regulators after GMAC Mortgage Bank failed spectacularly in late 2008, could not bring its internet banking systems back until April 17. Financial technology analysts commenting on this fiasco, which frustrated thousands of Americans who have not even received unemployment benefits for more than a month, have been quick to point out how ill-equipped many banks are in terms of scaling up their systems.
Blockchain technology has been developed to adequately scale services in times of high demand. Although Bitcoin, the most valuable and busiest cryptocurrency in the world, has shown signs of strain when it comes to scaling, more advanced blockchain networks such as Ethereum and Ripple would have no problems in handling massive transactions such as the ongoing stimulus payments program. This situation could clearly benefit from the use of digital currencies such as USD Coin, which is a token underwritten by investment banking giant Goldman Sachs, but the U.S. Treasury and the Internal Revenue Services are way behind the curve in terms of implementing blockchain solutions for their operations.
Advocates of blockchain technology have been urging the American banking industry to start adopting distributed ledgers for their retail operations, but there is a certain level of resistance in this regard, and it can be traced to traditional fees. Many banks have implemented blockchain systems for internal operations, but they are hesitant to do so to serve their clients. The problem is that it would be more difficult to justify charging fees when automatic systems are in use, particularly if they are supported by digital currency tokens that can be quickly converted to dollars.