The increase in the use of digital currency and its latest blockchain-based mechanism has attracted the interest of investors, traders, and financial investors alike. However, the digital medium snatches the ease of spending the currency similar to the way people spend cash or currency notes. Recently, new platforms and services have been introduced to help people handle Bitcoin and other altcoins in day to day finances. Here are a few facts that you need to know about cryptocurrency banking and its benefits.
What Is Cryptocurrency Banking?
Bitcoin which is the most famous and largest digital currency by market cap across the globe is held by digital wallets with unique keys. BTC and other digital currencies are equivalent to cash but in digital or electronic form. The digital currency cannot be held in digital form. It is a decentralized ledger system that is known as the blockchain, which implies that it is not controlled or supervised by a central authority or bank.
Cryptocurrency banking is at times thought of as an inaccurate term as the virtual coins are not regulated by any centralized body. Exchange firms and companies that provide the service of managing crypto, are not technically banks. They mostly enable people to hold their crypto funds in a virtual wallet or spend it as they would do in the case of traditional money. The users can manage their digital currency balances on the crypto exchanges.
Benefits Of Cryptocurrency Banking
The prime benefit of cryptocurrency banking is that the crypto exchange platform enables the users to use digital currency balances just like fiat currency to enable day to day purchases and withdrawals similar to cash instead of just holding it as an investment. Crypto debit cards which are also known as Bitcoin debit cards which the crypto exchanges issue functions like prepaid debit cards. So in this context, it can be said that there are some cryptocurrency banks in India. Again there are certain central banks that make the transfer of Bitcoin and other cryptos easy, one such example is Deutsche bank cryptocurrency.
These cards can be filled with digital currencies to enable in-store and online purchases from merchants that fail to accept cryptocurrency. Crypto exchanges mainly need individuals to build an account and/or digital wallets for applying for a crypto card. There are some platforms that also need the users to validate their identity using the KYC (Know Your Customer) verification process.
Can Bitcoin Kill Central Banks?
Previously, the opposite version of this question, that is can central banks kill Bitcoin was used. But now the question has changed. Bitcoin technology depends on algorithmic trust, and the decentralized system of this technology makes it a great alternative to the prevailing traditional banking system. But the digital currency has a small rate of adoption compared to the traditional system of banking which makes it a slower option to replace central banks. But it can be expected that soon, the Central Banks will start to make their own CBDC (Central Bank Digital Currency) that will bring in the blockchain technology in the banking system and the idea of cryptocurrency banking will get more soil.
Frequently Asked Questions On Cryptocurrency Banking
Cryptocurrency banks refer to the digital currency exchanges that are presently operational. So in that context, there is a big list of crypto banks among which Binance and Coinbase are some to name.
There are many cryptocurrency banks that offer a proper system of banking like receiving and exchanging cryptos. They are all verified and are quite safe to use.
Presently, Binance is among the best crypto exchanges when it comes to offering services to both beginners and experienced users.