Digital currency is presently the most trendy thing on all financial platforms. This is the period of change and there are significant alterations happening in the financial market. There is a huge impact of cryptocurrency on banks. It is being seen that crypto take over banking industry. The definition of the financial market has been altered with the advent of digital currency.
According to the financial experts, there is a significant increase in the transaction of the financial industry. These increases are not annually but on a daily basis and that is strongly led by the crypto industry. They assume that by 2024, there will be a 12% compound annual increase. The popularity of this digital currency industry is huge and is still increasing.
There are banks that use the traditional currencies for centuries and are not used to cryptocurrencies. These banks face a major drawback as the transaction speed of traditional banking systems is very slow compared to that of digital currency. This is how crypto takes over banking industry. In order to be at the same pace, the traditional banks need to be at par with the technological development and embrace them as the only digital currency that can upgrade and improve the global financial system.
How Does Crypto Take Over Banking Industry?
Banks and cryptocurrencies are two different branches of the same tree. Compared to the prevailing crypto projects the traditional banking industry is not rushing to provide cryptocurrency services to its customers. But money transactions internationally can be free and hassle free with only digital currency. Money transfers that are powered by digital currencies are instant and do not require any extra charges. On the other hand, the traditional banks take charges on every transaction.
Another important increasing trend of digital currency is crypto loans and smarter yield generation. Depositing digital currencies to power yields is becoming the most demanded service as various channels are enabling their users to take a loan as well as lend digital assets.
Depositors and investors of all kinds are entering the crypto market. So it is high to stop thinking will banks adopt cryptocurrency and start to work towards that because the future is crypto.
Why Should Banks Get Involved In Cryptocurrency Industry?
It is high time that the banks start to accept the fact that crypto is our future. Crypto provides all those amenities that the traditional banking system can not. It provides a decentralized, safe mode of transaction that does not require any fee as well. However, there are many nations that are thinking about government backed cryptocurrency and central bank cryptocurrency. This means they will have their own cryptos that will be created by the central bank of that nation.
Here are the reasons why traditional banks should start to adopt digital currencies:
- The custody service of cryptocurrency allows the users to hold cryptographic keys that are unique and which are associated with the availing of private wallets.
- With crypto, banks can bring in less experienced, new investors into this process by formulating tools that will allow customers to adopt digital currencies.
- It is mentioned in FinCEN that any crypto related transaction or any custody service that is conducted through crypto organizations should follow the KYC regulations. This will allow in avoiding nasty transactions, illegal activities, and scams. Such regulations enable the banks and other institutions related to finance to conduct customer alertness related to cryptocurrency transactions.
- Banks can help in moderating the security issues of the crypto holders. If cryptocurrencies are brought under the supervision of the banks then that will reduce criminal activities.
- Banks can work on public blockchain like stablecoins that will increase their speed of transaction. The clearance and processing of transactions can occur at a higher speed with cryptocurrency.
With the advent of digital currencies and their diversified use, the world is rapidly changing towards digital currency and time is not far when the traditional finance world will be altered with cryptocurrencies. Crypto take over banking industry is a scenario that we should get used to witnessing. And then only cryptos like Bitcoin threat to banks can be decreased.
FAQ On Crypto Take Over Banking
1. Will Cryptocurrency Kill banks?
As a cryptocurrency that avails peer-to-peer technology, Bitcoin may be poised to alter central banks. Central banks utilize interest rates and change the money supply of a nation to react to economic alterations. Critics of central banks assert that they have a negative impact on businesses, consumers, and the economy.
2. Will Cryptocurrency replace banks?
Crypto can easily take over fiat in all its uses as a medium of exchange, store of value, and unit of account. A system based on the decentralized blockchain can replace banking with quick transactions, lower fees, higher levels of security, and smart contracts.
3. Is crypto bad for banks?
In short, no. Crypto is the new future. It has made transactions and all financial works easier. Banks should start to adopt cryptocurrencies. Many nations are planning for their own digital currency like the U.S government backed cryptocurrency.