Cryptocurrencies are changing the world and how. A popular digital currency with powerful cryptography, Cryptocurrency Exchanges have observed a major growth over the years owing to their quick and private transactional schemes.
"The future of money is digital currency." - Bill Gates
A brilliant encrypted online payment system, cryptocurrencies are an intangible digital currency that are being adapted by huge online businesses all around the world as a stand-along payment system just like online payments by credit, cash or net banking. Although different from traditional banking systems where money can be withdrawn physically, cryptocurrencies are not seen but can be easily exchanged on the go.
With so many crypto marvels shaping up for crypto enthusiasts, it does lead one to think are cryptocurrencies presenting a threat for traditional banks? Let's have a look.
What is a cryptocurrency?
A cryptocurrency is a digital currency innovated using strong cryptography mechanisms that are decentralized as opposed to many traditional currencies that are managed by authorized figures or a centralized government making them more extensively secured yet ineffective.
Cryptocurrencies such as Bitcoin, Monero and Dash are popular digital currencies that provide advanced crypto techniques to be transacted in public vicinities where they are protected by a robust Blockchain application and are private to the third party keeping fraudsters away making way for a strong and extremely reliable digital money exchange system.
Crypto matters: Understanding cryptocurrency dealings
Unlike traditional banking systems, cryptocurrency matters are handled differently and it can be extremely overwhelming for crypto-eager beginners.
So how do cryptocurrencies work? Cryptocurrencies are stored on a public ledger using sound cryptography techniques to ensure all crypto records are unique, true and private. The best thing about cryptocurrencies is that the identities of the people involved in the crypto dealing are protected and record mishandling is avoided.
Every crypto user has a personal "crypto wallet" or "digital wallet" that stores every transaction that has ever taken place over the Blockchain to be stored on a ledger and it can further only be accessed with a digital key. The wallets display the available balance and cross checks if the right crypto user is involved in the exchange.
Since its inception, Online Cryptocurrency Exchanges have transformed the way payment systems work and companies such as Subway and Microsoft have adopted cryptocurrency payment gateways for quicker and more effectual money payments for retail shopping, online buying and more.
The age-old banking system that needed you to personally go to a bank has changed. Traditional banking can now be done just by simply tapping on a mobile phone. Traditional banking is now known to the world as "digital banking" and it has completely paved a pathway for business payments, transforming the way people carry out money exchanges.
Although as rosy as the image of digital banking sounds, it's important to encrypt your data and protect it from third-party vendors who can steal your information and most importantly, your money. Safety risk aversion measures have been curated for digital banking in the form of cryptocurrencies. That does raise a red flag for traditional banking. Let's be honest, when cryptocurrency exchanges can do exactly the same, infact much more efficiently then why would someone even need traditional banking anymore?
As Rick Falkvinge once said, "Bitcoins will do to banks what email did to the postal industry."
That's harsh. But not completely illogical. People will no longer have to turn up at the doorsteps of banks with a sorry face for money matters. Cryptocurrencies are quick and offer no such menial procedures, becoming more popular among the masses as people who once could not rely on traditional banks can now rely on another form of finance.
Which brings us to the most important question are traditional banks under threat from cryptocurrencies? As a matter of fact, yes they are.
Multiple sources have already cited cryptocurrencies as a humongous threat for the other financial sectors. Technology is progressing and with so many crypto innovations in line, there are good number of reasons why cryptocurrencies are better and why traditional banking should be afraid. Be very afraid.
Although cryptocurrencies are still in their infancies, it is only a matter of time before the financing universe will have a whole new outlook towards money exchanges. The cipher spark has been ignited, the flames are rising and soon the world will be engulfed in the crypto fire.
It's about time traditional banks should beware as there are some people out there who do not want to want to be tied to a bank anymore and cannot wait to get their hands on some crypto cash.
How traditional banking can avoid the spell of financial failure?
Traditional banks could start with some baby steps first. What is the one thing that people love? It's obviously digital convenience. Maybe big banks could start by becoming more mobilized and incorporating reliable digital practices for safe banking, real-time currency procurement is more valuable than scavenging for cash hopelessly at the last.
Surprisingly, it has been noticed time after time that as secure as traditional banking claims to be, in no way is it reliable. A lot of malpractices are carried out time and time again with customers having to face the brunt of it with unnecessary extra charged fees as well as needless expensive banking overheads. This obviously will not work anymore and it's a matter of time till traditional banking systems will lose even their most beloved investors.
Traditional banks need to stand out if they wish to stand a chance against cryptocurrencies. Trusty customer service should be made a priority and extra fee payment schemes should be abolished. The whole world is in reach just by a simple mobile phone, traditional banks should advance innovative digital mobile solutions to get a line in the rat race or endure the impact of being not-so-important.
The final call lies in the hands of banks who now believe in the power of crypto and are nurturing its best practices to regain their status. Concurrently, cryptocurrencies pose dubiety amongst many people as they are relatively newer and yet to be explored well.
It's time that traditional banks pick up the pace and climb aboard the digitalization train!