Since the world was first introduced to cryptocurrency, a lot that was deemed impossible before realizing that crypto might just be the ultimate way out.
The vast universe of crypto started with Blockchain technology which brought us Bitcoin. Later on, many additional types of digital currencies were added to the list. Despite its widespread popularity, this digital form of currency is still in its infant years. There are many aspects of cryptocurrency that need to be stabilized but as soon as it is, it will be the greatest shift in the history of mankind.
Cryptocurrency aims to eliminate the shortcomings of fiat currency, cash, or money in the banks. As all these forms of currency are regulated by centralized systems (governments, banks, or people in power). The basic logic is that there is a higher chance of fraud, loss, or embezzlement – as people are involved in the system.
On the other hand, cryptocurrency is a decentralize system that relies on algorithms rather than humans. Crypto as a global form of currency is immune to “fraud by humans” and isn’t confined to any borders or governments. Anyone in the world can buy it, store it, and transfer it to any part of the world just as long as they have an internet connection.
Once, cryptocurrency is fully configured, established, and recognized all around the world, it will provide the flexibility, privacy, and security that everyone needs. That does not mean that the fiat currency will completely vanish. It will be just like the gold that retained its value when bills were introduced.
Cryptos vs. Banking Systems
In the long run…Both the fiat currency and cryptocurrency can and should be used for the same purposes. Just like fiat, crypto should be used to go shopping, pay at restaurants, stores...etc
The simple difference lies in their operations. Cryptocurrency can only be bought through online channels and you need a digital wallet to store and transfer it. Unlike the fiat currency, cryptocurrency is not controlled by banks or any type of central government. It can also be called free currency and anyone can use it anywhere without being liable for anything.
To understand it better, we will first see where the traditional banking system falls short.
The shortcomings of the banking systems
Here are the shortcomings of the banking systems.
) Not globally accessible
The main drawback of banking systems is that they are not accessible all over the world. Banks are usually found in highly populated areas like cities or towns. Moreover, they are closed on weekends which makes it impossible to use their services during that time.
) Not equal to all
To survive and keep making profits, banks usually utilize different marketing strategies. They may categorize clients as low value and high value. They offer their most valuable services and projects to high-value clients which makes the banking system unfair. It favors the rich and undermines the poor.
) Not secure enough
Banking systems run on computers and some of them may not even have strong firewalls. A skilled cybercriminal can easily hack the devices of a bank or its mobile apps.
) Too many charges
Whenever you go to open a bank account, you have to go through a long list of documents and meet their requirements to finally have an account number in your name. You need to deposit a specific amount at the time of opening an account, some of which won’t even show up in your account. Also, the transaction charges are too much, especially when you are making international transfers.
) Slow services
At any given time, a bank can run into problems like “shortage of staff” to effectively deal with their customers especially before holidays or on special occasions. This renders their services too slow.
) Prone to bias
The banking system utilizes names and account numbers which invites biasness. An officer of the bank may provide delayed services to people that have somehow caused him grief.
How is cryptocurrency better than banking systems?
Cryptocurrency offers the following advantages that make it better than the traditional banking systems.
) No third-party involvement
Cryptocurrency is free of any human touch and it cannot be manipulated by anyone. As there are no third parties involved because of the decentralized nature of cryptocurrency, it is more private, secure, and extremely reliable.
Cybercrimes are the biggest threats to any financial operation. Anything involving a human touch can be easily hacked. Cryptocurrency utilizes nothing of that sort. The Blockchain technology used by cryptocurrency utilizes data tunnels that are highly secure and cannot be detected by hackers. Cryptocurrency is far from any form of human involvement which makes it fraud-proof.
) Anti-Corruption alternatives
Human involvement in matters directly related to money gives rise to corruption and fraudulent activities. Cryptocurrency aims to eliminate that by introducing smart contracts. These contracts require little third-party involvement and solely run on instructions from a computer program. The automated nature of Blockchain gives little room for fraud or any other illegal activity.
) Unbiased access
Since cryptocurrency is just starting out, there is room for everyone to participate. It will stay the same way in the long run. This form of currency doesn’t discriminate between the powerful and the poor. As long as you can have access to the internet, you can have access to Blockchain. Manage your crypto wallet and store your cryptocurrency for as long as you want using your smartphone anywhere.
) No middle man
Cryptocurrency brings you freedom in transactions. This is not the case with banking systems. To transfer money or to cash out through banks, you have to get in lines and go through a lot of paperwork. On the other hand, cryptocurrency just lets you handle your transactions however you like. With crypto, you can make many more transitions as compared to its counterpart without having to be held accountable for anything.
) Many options to choose from
Unlike the banking systems where you will see a similar pattern, you can choose any of the many forms of cryptocurrencies. All of them come with different characteristics and features. It is up to you to choose that which suits your needs best.
Blockchain offers way more potential benefits than traditional banking systems. Investors can make more transactions at a faster pace without having to worry about security or privacy. However… cryptocurrency is still work in progress and to win the trust of everyone as a potential alternative it needs to find and eliminate all the shortcomings of the banking systems.