03 / 10 / 21
How Crypto can transform your banking?
When the first cryptocurrency was introduced, it did not seem that this new asset class has the ability to do wonders in the financial industry. In the first few years, most of us didn’t even know about it, let alone putting it to good use.
However, a decade after benefitting from cryptocurrencies, we have realized the immense utility and the potential it has to revolutionize our existing banking system.
Currently, remittances worth billions of dollars are sent across the borders. However, in order to execute such transactions in the current system, a huge amount of personal data is required from the sender and recipient, which is not acceptable to many. Moreover, traditional banking does not only take a huge amount of time to move the remittance, but the transaction fee is also quite significant.
Therefore, cryptocurrencies offer a near-perfect solution in this regard with the help of blockchain technology. Since you only need a wallet address while transferring the assets, the privacy of both parties is protected and since there are no intermediaries involved, the transaction fee is negligible as well. One of the best perks is that the recipient can receive funds in a matter of minutes (this is on congested networks like BTC, however, if you go with modern crypto networks, you could transfer the funds in seconds).
Currently, banks are localized. Implying that if you want to make an account, you need to be a resident of that country (in most cases) and the banks only entertain currencies for that jurisdiction. If you attempt to make a foreign currency account, the taxes are heinous.
This is yet another area where crypto proves its case quite decently. If the banks adopt it, the customers can open their accounts from anywhere in the World and all they would need is an internet connection and a smartphone/laptop. It would not only enable the customers to be a part of the global economy and expand their reach Internationally, but the banks could also entertain many more customers, thus increasing their revenue as well without having to open physical branches in different parts of the World.
Most of the banks have their servers in a centralized location for ease of maintenance and protection as well. However, this comes at a great cost. If there is any natural catastrophe or a cybersecurity event where a data center gets hit, the entire bank can go down, resulting in a nightmare for the organization and customers alike.
This is where cryptocurrencies can play a vital role as the technology is decentralized and the copies (or rather backup) of data are spread across hundreds of nodes. Therefore, even if 99% of the servers go down, the network can keep functioning by re-syncing the data from 1% of the operational nodes.
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