Did you know that experts expect Bitcoin’s value could multiply to twenty-five times its current value within the next decade?
Cryptocurrencies are growing in popularity around the world every day. This is making many people want to know how valuable they will be in the future. When making investment decisions you shouldn’t act on impulse and should instead make decisions that are based on logic and strategy.
This is why it’s important to know whether banks are going to matter in the future. To make you make sense of the future of money, we’ve created a guide of the top financial tips about banking and cryptocurrencies.
Why Banks Are Important Today
Banks are able to store currencies and provide consumers with security. When you open a bank account and deposit money, you can rest assured that your money is safe. This is because banks are FDIC-insured.
They’re also able to keep records of your transactions. This oftentimes includes things like processing activity from credit and debit cards.
If you’re traveling internationally, you’ll never have a problem taking money from your account in different currencies. All you need to do is withdraw cash from an ATM.
Those who want to buy a house usually need help from banks so that they can get mortgages. New business owners also need banks if they want to get lines of credit to get financing for making investments.
Where Traditional Banks Fall Short
The financial crisis of two thousand and eight showed consumers that the world’s banking system has weaknesses. This inspired many people to develop new ways to work with finances such as Satoshi Nakamoto, who invented Bitcoin.
One of the reasons Bitcoin has soared in popularity is that it didn’t need to incorporate traditional banking into its process. Here are other ways that banking falls short.
Lack of Accessibility
You’re out of luck if you want to visit your local bank teller during the weekend because they’re only open on weekdays. Banks also make it difficult for those who need to make big transactions. Instead of doing this online, you have to go in person to visit a branch.
Inclusion
Traditional banking systems are set up to reward those who certain groups and people. These people receive incentives such as soft loans, longer payment durations, and better interest rates. This unfair system is exclusive and ineffective.
Problems with Security
Skilled con artists can easily hack banking websites and mobile apps. This is why so many people get money stolen from their bank accounts. Traditional banking systems are also vulnerable to fraud and embezzlement.
Not only is this a problem for consumers but it’s also an issue for insurance companies that offer fraud protection.
Higher Feed and Slower Transaction Speeds
Traditional banks have many unnecessary fees and taxes on transactions. Most banks charge their customers for withdrawing cash from ATMs that are out of their networks. It’s also common for banks to charge high fees on international transactions and wire transfers.
Banking systems also run on ineffective digital systems. This means that they have slow protocols, which means it can take a long time to send and receive money.
How Cryptocurrencies Are Better Than Traditional Banking
There are many ways that cryptocurrencies function more effectively than traditional banking systems.
Many people choose to use cryptocurrencies to make transactions because they are more efficient and have lower transaction fees. Here are more top ways that cryptocurrencies can make traditional banking obsolete.
They Are Decentralized
There is no third party that controls cryptocurrencies. This means that there are fewer human interactions involved in making transactions, which means that they are less biased.
Since anonymous identification numbers are all that are used for making transactions, it’s safer and more reliable to do business with cryptocurrencies than with banking.
Fewer Concerns About Security
Those who understand the importance of financial planning are probably concerned by traditional banking’s lack of security. Cryptocurrencies, on the other hand, operate on blockchain technology. This means that their systems are nearly impossible to hack.
The Ability to Make Smart Contracts
One of the greatest benefits of cryptocurrencies is that they let people create smart contracts. These smart contracts don’t need humans to create or process them because computers do all of the work. This means that they are reliable and easy to create.
Fast Transaction Speeds
It’s possible to process many more transactions by using cryptocurrencies than it is with traditional financial systems. This is because there are many protocols that traditional banks need to use to make transactions. By using cryptocurrencies, it’s possible to make transactions that are almost instantaneous.
Why the World Still Needs Banks
Even though the age of cryptocurrency is changing how people handle their money, there are still many reasons why to believe in the importance of banks.
People still need to use traditional banks to do certain kinds of investment banking. This is because it’s not possible to use cryptocurrencies to do things such as underwriting and overseeing acquisitions. This is a type of work that humans need to do.
It’s also not possible for cryptocurrencies to mimic the vital operations of central banks. This means that there is nobody to set interest rates or control inflation.
Make Use of Top Financial Tips in the Cryptocurrency Era
If you’re worried that banks will become obsolete because of the rise of cryptocurrencies, remember that there are many important things cryptocurrencies can’t do that banks can do. People still need banks to offer things like loans and mortgages. It’s also important to have a central bank to keep control of inflation and set interest rates.
CFI is a great resource for those who want to find out about finance and banking trends. If you have any questions feel free to contact us. And if you’d like to receive financial tips from CFI don’t forget to sign up for our newsletter.
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