The digital money revolution is one of the most important subjects in the digital age. Many innovations and technologies have been introduced to make the digital economy more reliable, transparent, and faster. The digital money revolution has brought many changes to the traditional banking system.
What is blockchain technology?
Blockchain is a decentralized network that keeps an eye on everything that happens within your business. It’s a series of servers and computers known as nodes, all working together to create an index of transactions involving a product or service. As these changes are made, this information is encrypted, sent out to the entire community, and stored on all the computers in the blockchain.
How does blockchain challenge banking?
Blockchain technology, and the cryptocurrency market, are throwing a shadow over traditional banking. Still, they’re already driving more changes, like the introduction of online banking, fast services, and many types of optimization that looked impossible a few years ago.
Blockchain is secure
With the integration of blockchain, sensitive data can be kept secure. Blockchain encrypts essential information and makes it impossible to hack or change. For even better protection, data can be anonymized while still keeping track of which information needs to stay private. This means that certain areas can remain visible to people who are allowed access to your records while preventing unauthorized actors from accessing any identified or private information.
Blockchain is traceable
Blockchain is created to complement supply chains by cutting out the middleman and allowing companies to provide full transparency across their supply chain. When it comes to food products, for example, an enterprise can link every step of its delivery chain with a secure digital record that tracks each asset along the way. It also follows the source of money, eventually putting an end to money laundering.
Blockchain enables fast transactions
Inter-continental bank transfers can take a long time to process, which can be frustrating. Crypto transactions, on the other hand, are usually processed within seconds. This makes crypto a much more convenient option for those who need to make quick transactions. Many people who’ve shifted to crypto transactions have confirmed their efficiency. The fact that SWIFT has implemented a ton of new technologies after being challenged by Ripple shows the potential of blockchains.
Blockchains are trustless
Smart contracts in the blockchain enable transactions and processes to be automated, much like a technical vending machine. The blockchain acts as the vending machine’s database, storing information about the availability of goods (in this case, coins or tokens) and contractual agreements. Once the conditions are met, then the transaction can go through. Most smart contracts are executed by the Ethereum blockchain, meaning you should check the Ethereum price regularly.
How can digital money damage banking?
We all read cryptocurrency news about lots of stuff. One of the new trends is that crypto will eliminate banking, which is a very serious threat, considering how powerful banks are, with their strong political lobbies, wealthy customers, and the whole system that has been made to suit them.
Crypto projects are flexible
Banking is under pressure from cryptocurrencies because they are more adaptable. With technology on their side and nothing to lose, cryptocurrencies could soon overtake traditional banking institutions. After all, banks have a lot to lose in this fight. Why?
● Technocrats run crypto projects – this means the whole movement behind blockchain is based on technology.
● Devoted advocates of the change – people who deal with crypto love crypto. Those who have bank accounts have to have them. Doing something for the sake of doing it is different than doing something with pleasure.
● Banks are static – banks cannot be very dynamic; they are meant to be predictable, as they cannot exist without clients. They’re also regulated, which means they should abide by a standard set by the countries. Crypto projects are decentralized; thus, they can make changes if things go wrong.
Digital money kicks the mediator
Cryptocurrency offers a direct way to pay for goods and services without needing a third party, such as a bank, to process the transaction. This means you can get your full money without any fees taken out. Eventually, sellers get more money; buyers don’t cover hefty transaction fees. It’s a win-win. Not for the banks.
Digital money automates processes
Banks have employees who work in different departments, making it difficult to get things done. In the crypto world, everything is automated. This makes things much easier and more efficient. Clients are just a click away from the information they need. On top of that, there’s no “secret” stuff. Everything is up and available for anyone.
Blockchain is decentralized
Blockchain being decentralized means your money will remain yours until you spend it. That’s because, with a decentralized system, there’s no central authority that can freeze your account. So, you can rest assured knowing that your funds are always accessible to you. It’s not one or two cases when banks get “emptied,” and you lose all of your money. With blockchain, that’s just not possible.
Blockchains don’t have monthly maintenance fees
Banks make a lot of money by charging fees. You have loan processing fees, monthly bank account fees, credit card fees, etc. When you do the math, it can creep up a lot, especially for people with 3-4 bank accounts. With blockchain, you don’t have to pay a fee for having a wallet, and you only pay a small fee for network maintenance. This allows users to keep more of their money and helps reduce the cost of using cryptocurrency.
Digital money is seriously damaging banking now. While it hasn’t done the lethal blow, it’s pretty satisfying that this push has made banks much more transparent. The challenge will favor customers who enjoy smaller fees, better and faster service, and the ability to control their own money – something you should have as a default right.
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