If you are someone who loves cryptocurrencies, then you must be treating banking or banks as evil. It is not just the opinion of a few people, but a majority of people have faced numerous problems due to banks. There are many unnecessary things as part of banking that make them evil. One of the most common problems that many people face with banks is higher interest rates. Also, most international transactions or transfers are charged very high. People always wanted an alternative for the banks. This is why we encourage you to try a trading system that is free to use before you commit to anything.
As part of this search, cryptocurrencies came to be lifesaving. Maybe not during the early stage of their launch, but after a few years of the launch of Bitcoin, banks started worrying. There was a point when banks thought about what would happen to banks if a massive crowd started accepting cryptocurrencies.
So, how are cryptocurrencies different from banks? Why are some banks worried about cryptocurrencies? If you are new to this crypto world, then here we have some useful information for you.
Banks are centralized bodies:
One important point about any bank is they are centralized. There are special bodies who make any kind of decision in the banks. These decisions can affect all the account holders and sometimes the account holders will not have anything to do with these decisions. They have to agree with the bankers. It is not just in a few countries, but the entire world is working on the centralized system. Even in democratic countries, the government or the President are the centralized bodies. The entire financial process will be under the control of the national or central banks. This is why many times, people feel why are banks even centralized.
Cryptocurrencies are decentralized:
The best thing that people love about cryptocurrencies is they are decentralized. That’s exactly opposite to banks and that is the point that many people love about cryptocurrencies. You need not have to wait for any third party to approve or process your transactions. Added to that, the transaction fee is very low, even for cross-border transactions.
Decentralized is not a new concept:
This concept of decentralization is not new. It was there in the market for a very long time, but people just started trusting it now. But when the concept of blockchain was introduced, this decentralization concept has now become possible. Maybe the concept of blockchain is new, but it will still take some time to explore. Once the blockchain gets popular, many things in the world will get affected along with the banks and other financial institutions.
No middlemen are required with cryptocurrencies
One main difference between cryptocurrencies and banks is there are no middlemen in cryptocurrencies. It is the bank that is the middleman in the centralized finance systems. Whether it is a money transfer to someone, or you wish to pay your bills or anything that you do with your bank accounts need to be approved by the middlemen, that is your bank. But that is never the case with cryptocurrency.
The individual computers or the central nodes that complete the transaction in the crypto world. So, this eliminated the necessity of middlemen, banks, e-wallets, or any kind of other middlemen.
So, how does crypto affect banks?
In many different ways, cryptocurrencies have proven that they are better than banks. For example, if you look at the transaction fee, you need not pay commission to your banks. But when it comes to cryptocurrencies, you need not have to pay any heavy fee like banks. The fee is low for crypto. Also, the transaction time is less. You need not have to stand in queues in the bank and wait for the middlemen to process a transaction for your hard-earned money. You can be doing it by sitting in the comfort of your house.
To conclude, cryptocurrency has brought several changes already in the financial world. But whether it is going to take over the banks or not, is tough to predict. Banks exist for several years but cryptocurrency is just at its initial stage. So, experts are still doing their research on this. We will have to wait and see how people will accept cryptocurrency over fiat currency, and that will decide its effect on banks.
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