Cryptocurrency enthusiasts have been proclaiming that crypto will replace fiat currency. It is easier said than done. But People will only adopt crypto if there are tangible benefits in doing so. Here are some of the benefits for banks and other financial institutions which adapt to cryptocurrency banking.
A cryptocurrency transaction being P2P doesn’t require any intermediaries. It reduces transaction costs.
- Faster Transaction Speed:
As various intermediaries are cut, the speed of transactions increases. It is very important in international transactions. Also, when banks make international payments, the customers have to bear currency conversion costs. Cryptocurrency usage eliminates this conversion cost. Some international banks have started pilot projects on creating their blockchain and their digital coin, which is pegged to $1 and carrying out international intra-bank transactions on the blockchain. It gives them the transaction speed of a cryptocurrency. The bank’s digital coin is not listed on any crypto exchange though shielding it from volatility.
The value of fiat money can change according to government monetary policies. The demand-supply ratio in the market decides the value of cryptocurrency. Cryptocurrency is mined, so the market determines its value.
- Easy to Use Cryptocurrency:
Users do not have carry around wallets with wads of cash and credit guards.
- Cryptocurrencies bring banking to remote places where banking facilities may not be as good as in towns and cities.
- Cryptocurrencies cannot be counterfeited. Hence, financial crime reduces.
Apart from the benefits mentioned above, blockchain technology, which is the base of cryptocurrency currency, is a distributed ledger system. Transactions recorded on it cannot be erased or changed. The blockchain is updated in real-time, and the customer is notified of any changes in his account. Thus, cryptocurrency and blockchain have the potential to bring banking to unbanked millions.