Is Traditional Banking Under Threat From Cryptocurrency?
Some crypto advocates believe strongly that cryptocurrencies would replace the traditional banking system sooner or later. With Bitcoins and other popular cryptos on the way to mainstream adoption, more and more businesses are turning to these cryptocurrencies as a preferred payment method. Traditional banks are likely to feel threatened by this development, but how far is this threat real?
The main reason why cryptos made a mark in the financial world was because they were decentralized and not issued or controlled by governments and banks. This explains why people felt that cryptos would bring advantages over traditional banking methods. But the truth is that both traditional banks and cryptocurrencies can work together and share a common platform. Cryptos are founded on the blockchain technology that guarantees better security and higher transparency, features that could benefit banking systems too. Rather of putting tangible savings in the bank, crypto trading is a better option. When trading cryptos with automated trading platforms, you might make bitcoin revolution your first pick.
Is Traditional Banking under Threat from Cryptos?
- If you had to borrow money from a bank you are expected to meet certain criteria. This is where cryptocurrencies can turn out to be appealing, because they allow you to access money instantly through P2P lending platforms. These peer-to-peer networks can provide you with far more convenient solutions than banks and this is why popularity has skyrocketed.
- Traditional banks may have made sincere efforts to integrate modern technologies and convenient payment methods but cryptos have managed to score past these. So, banks will now have to either improve their existing systems further or collaborate with crypto systems to embrace the latest technologies. Following the lead of cryptos seems to be the inevitable outcome because in the crypto world, all things take place in real time.
- The biggest advantage that banks continue to have over cryptos is public trust. People have faith in traditional banking systems in spite of the drawbacks and loopholes. So, traditional banking systems can borrow from digital currencies and take advantage of the features they have to offer. All they need to do is to up their technologies and reduce the current fees or transaction costs; and they can continue to be relevant. Both banks and cryptos should be able to thrive with one another instead o competing against each other.
- Cryptos have appealed to people in many underdeveloped countries where the access to traditional banking systems is severely curtailed. It is possible, for instance, for you to exchange cryptos outside banks through smartphones. So, those who could not access funds and trades easily can now do so seamlessly; this has helped to get people out of poverty. Gone are the days when you had to spend days to get loans from banks and traditional financial institutions. Today, you can rely on peer-to-peer networks for financing your projects.
To sum up, banks are indeed feeling threatened by cryptos, although it does not have to be so. According to BNP Paribas, a French banking giant, the technology behind cryptos can make banks redundant eventually. The software on which the cryptos are based is akin to inventions with potential to radically transform the financial world. To stay relevant, banks will now have to become more digitalized and provide real-time services. Traditional banks have often had complaints regarding account manipulations; this is something that customers can now detect through their mobile phones making it hard for banks to get away with these practices any more. Traditional banks will have to improve their digital offerings, customer services, and fees.