Will Traditional Banks Be Replaced By Bitcoin?
The blockchain has disrupted loads of different industries like supply chain logistics and copyright protection. First and foremost is the world of finance and banking. Suddenly there was another way to finance without using a bank and things may never be the same.
The technology behind Bitcoin and other cryptocurrencies has made it possible to have a completely transparent and secure ledger by way of distributing it across a proverbial chain. There is no one server, but rather thousands or millions depending on the blockchain being used.
This means that it is ideal for storing value. Which is all money is so Bitcoin has come along and made a system that works for many people without ever needing a bank. Does this spell the end of traditional banking? Let’s take a closer look in this article.
Ignoring the frequency of Bitcoin trading and those that make a living off of playing the exchanges, there is a growing segment of the population who are turning to cryptocurrency to replace a bank.
In some emerging economies, banks are not to be trusted and cash value can vary wildly due to inflation. The banking institutions in these countries are very weak and can’t offer security that vulnerable people really need so they can have a secure place to store their money.
Cryptocurrency is an excellent way for people to do better than simply opening a checking or savings account in a bank in these countries. How to buy BTC in India, or Nigeria or any other country with many unbanked people will vary, but the process is largely the same.
There are bank machines for cryptocurrency in which you can buy Bitcoin and others with cash. And in the case that these are not available then you can use an app on your phone to enter an exchange which will allow you to use things such as gift cards, Paypal and many other non-banking means.
Banks make a lot of money collecting fees. They act as middlemen in many purchases using credit or debit cards. With each payment, there are fees that the seller must pay to the merchant services that they use to accept payments by credit card.
Since there is no middleman needed to process transactions, it is much cheaper to use Bitcoin. On the blockchain, there is a system that is totally trustless. The blocks are verified transactions that are on the ledger and then distributed to everybody on the blockchain. Users verify the transaction and then it is encrypted. Since there is no server, but rather every user has a copy on their computer, these transactions can’t be altered in any way. If one were to be altered, it wouldn’t be altered on all the others so it wouldn’t be verified.
This all is to say that there is no middleman that takes a cut so it is far cheaper to use cryptocurrencies. Sending money costs a fraction of what it costs to make transfers with a traditional bank account as well.