If you’re a crypto enthusiast, you would have probably heard the term phrase “be your own bank” or the term “bankless” — the idea being that crypto can offer more control over your finances and revolutionize the financial sector.
As the crypto-economy has evolved over time, we have witnessed an array of products that compete directly with the financial system. From crypto direct deposits and debit cards to decentralized saving/lending and cross-border payments, the crypto-economy is rapidly challenging many of the core ideas around what money is and how it can be put to work.
Here are several ways blockchain technology will change the future of the banking system.
Money transfers & cross-border payment.
In many developing countries, traditional remittance providers can be exorbitantly expensive. Blockchain has the potential to make international transfers more cost-effective, transparent, and secure. Currently, when transferring money, transactions can take multiple days and involve a variety of third parties. However, blockchain eliminates this and offers faster and simpler peer-to-peer transactions that are more effective through a Bitcoin wallet.
With certain cryptocurrencies, you can earn rewards for simply contributing to the security of the network — by “locking” some of your holdings into a staking pool for a certain timeframe. This is an excellent option if you were planning to hold onto the crypto for a longer period — instead of having it sit idle, you can put it to work for you.
The Blockchain network is maintained by thousands of computers, meaning there is no central point where hackers could attack the network and change data without leaving evidence behind. This aspect of blockchain makes it extremely relevant in the current global scenario of rampant cybercrime and widespread ransomware attacks that can compromise sensitive information and lead to losses of hundreds of thousands of dollars for the victims.
The rise of crypto credit/debit cards
Visa and Mastercard have made significant progress in bridging crypto and traditional finance by expanding their product portfolio and offering various debit/credit card solutions. Essentially, these serve the same functions as regular credit or debit cards but, instead of using just fiat currency, you can use your crypto to pay for goods and services to vendors that accept them.
People who own any cryptocurrency can simply top-up their cards through a payment processor or transfer their funds to specific wallets and link them with their cryptocurrency credit or debit card of choice.
Blockchain technology is slowly but surely making its way to the banking and financial services industry. It is also capable of transforming the overall security of the banking sector. From remittances to securities trading to cross-border payments, blockchain technology is poised to make a huge impact on the way international transactions are carried out and digital assets are kept secure.