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- What is Crypto Banking?
- Flaws of the traditional banking system
- Future of Crypto Banking
- Can Bitcoin Kill Central Banks?
Reading time: ~4 minutes
Cryptocurrencies are present in the portfolio of almost every investor. The first-ever decentralized coinage was released in 2009 by a Japanese inventor named Satoshi Nakamoto. Undeniably the concept of cryptocurrency was present in the industry prior to the invention of bitcoin, but no one implemented the concepts to an actual robust model.
In a nominal range of time, bitcoin acquired the attention of famous mainstream players, and the price of bitcoin began to grow. In addition, Bitcoin’s store value portrayed an image of bitcoin as an investment asset in front of the crypto enthusiast.
However, bitcoin is not merely an investment asset as there are several solicitations of bitcoin. Subsequent to bitcoin, the cryptocurrency industry was subjected to ample decentralized cryptocurrency equipped with some robust technologies. You might be familiar with the fact that initial coin offerings were on a roll in 2017. As per several proficient analysts, crypto banking and decentralization will be on a roll in 2021.
Crypto banking is a much better ecosystem in contrast to the traditional banking system as the conventional banking system is subjected to ample flaws and bumps. Therefore, the rise of crypto banks in recent times is phenomenal; here is everything you should know about crypto banks and why these banks are getting popular.
What is Crypto Banking?
Cryptocurrencies are underlined as a virtualized version of cash that is not backed up by any government authorities. The utmost prominent cryptocurrencies are ethereum, bitcoin, and lite coin. Expect these currencies. There are nearly 9000 altcoins present in the industry, and almost every model of cryptocurrency is derived from the basic concept of bitcoin.
People generally consider crypto as an investment asset and interact with this digitalized coinage merely on a trustable exchange or a bitcoin wallet. The traditional banking systems allow you to monitor your funds and capital commencing a specific firm; the monitoring part also includes transferring and holding payments.
The core notion of crypto banking is much similar to traditional banking, but the dynamics of traditional banking are much different from crypto banking. Therefore, Crypto banking is underlined as the progression of supervising your funds in the form of crypto commencing a fintech institution.
Flaws of the traditional banking system
Traditional banking systems are managed by a specific number of higher authorities and statutory bodies. Still, the economy of a country cannot be potentially managed by a limited number of entities. Higher authorities are meant to regulate fiat currencies and funds stored in the bank account of users to mitigate chances of any mishap or illegitimate activity, but rather than just monitoring and regulating the fiat currencies these authorities are correspondingly witnessed manipulating currencies to an exceeding extent. If you want to start trading with The News Spy platform, click the image below.
Everyone is familiar with the economic abysmal of 2008, where several banks participated in illegitimate activities. You might be stunned by the fact that the global economy confronted a realized loss of almost $1.2 trillion at that instance, yes you read it right.
Regardless of such incidents, central banks are still performing similar activities. The essence of this traditional banking system and higher authorities in sustaining the economy of any possible region is overrated. Even if these authorities utilize the funding of average people and fail miserably to sustain the economy, they would be forgiven easily.
These centralized authorities experiment with the paper currency of people to come up with a better system such as demonetization and taxation policies etc. Unfortunately, all the more centralized authorities of several regions have failed miserably to control the inflation of fiat currencies. People have believed in the existing system for a very long time, but the results are always similar, and that is why average people prefer crypto banks over the centralized bank.
Bitcoin’s white paper demonstrates bitcoin as a decentralized cash ecosystem that is complexed on a complete peer-to-peer network, and every transaction of bitcoin is uploaded on the blockchain. Several multinational companies such as Tesla motors, micro strategy, and many others have invested a gigantic buck in bitcoin.
All the more, Tesla even started to accept bitcoin payments for a considerable period of time, and he stated that the transactions in bitcoin would be retained in bitcoin merely to sustain the liquidity of bitcoin.
Future of Crypto Banking
As established ahead, crypto banking is much more robust in contrast to the traditional banking system. Crypto banks underlie the phenomena of decentralized finance as these fintech firms cannot be potentially controlled by any possible higher authorities.
Undeniably crypto banks cannot replace the centralized banking system overnight as there are still many people who believe in traditional banks. There are ample crypto banks that allow you to monitor and regulate your crypto holding using their fintech firm.
These fintech firms are complexed on the peer-to-peer network and a blockchain model, which assist the institution in achieving decentralization. Peer to peer network promotes the necessity of a set of entities for regulating the system, and blockchain records the information regarding every possible transaction that occurred on that network. There are several traditional banks that allow you to hold and buy crypto assets, including e-banking platforms such as PayPal.
Can Bitcoin Kill Central Banks?
Central banks or the traditional banking ecosystem has been present for almost 3000 years, and bitcoin was unconfined at the instance of 2009 economic abysmal. However, the growth of bitcoin over a period of time is commendable as tech-heads have now blazed the trail of making decentralized models based on blockchain technology.
All the more the rate of inflation of bitcoin is just 1.7% at the instance, beyond the shadow of doubt bitcoin is subjected with ample of characters which are potent enough to kill the central banks, but the volatility of bitcoin alongside its restricted supply does not contribute in making it more robust than the traditional banking system. But is not the mere decentralized coinage in the industry as there are several other cryptocurrencies that can offer an unlimited supply and nominal volatility.
Thank you for reading!