Introduction
All across the globe, crypto enthusiasts are very keen on the prospects of crypto banking. For centuries, customers have relied upon the security offered by the traditional banking system. They have looked upon the banking infrastructure as a pyramid of reliability and transparency where assets are preserved securely. However, cryptocurrency has opened new avenues of opportunities in front of wage earners and potential investors. Now, it has become quite common to understand the market trends before any kind of investment.
Let us analyze the basic differences between traditional banks and crypto banks and the unique advantages offered by each.
Physical versus Digital form
Fiat money is a medium of exchange that denotes a particular value and can be preserved for future use or transferred. In contrast, cryptocurrency is a digital medium of exchange and its value is exclusively determined by demand and supply.
Centralized versus Decentralized system
Traditional banks are financial institutions that offer customers the scope of depositing and withdrawing money and preserving assets in the form of fixed deposits, bonds, etc. Crypto banks utilize the decentralized blockchain technology in which an individual can transact using cryptocurrency and store assets in crypto wallets.
Regularized versus Independent Mechanism
Traditional banks are regulated by an authorized body, regulated by the government. Crypto banks do not have the involvement of a third party and are completely free from governmental control. This decentralized system makes crypto transactions more secure, reliable, and free from biases or prejudices. In today’s world, bank frauds are quite frequent entailing unparalleled financial losses on the part of the customers. By developing more sophisticated and secure modules of transactions, crypto banks can become more user-friendly and reliable in the long run.
Cryptocurrencies have the option of running on smart contracts which can give instructions to computers and execute them with minimal human involvement.
Security issue
The security issue is indeed a crucial element. We are all acquainted with the way in which even highly secure banking servers have been hacked. With its decentralized blockchain technology, crypto banks have infrastructure which is less prone to hacking.
Transaction speed
Banking transactions are often delayed due to slow transactions and often come with the tag of additional fees in the case of international remittances. Even a basic bank transfer from one country to another involves a series of intermediary phases before reaching the ultimate destination.
Crypto banks are thriving on high transaction speed. On average, Bitcoin transactions take 10 minutes except in extreme cases which may span over a period of a few days.
Accessibility
Unlike traditional banking systems, crypto banks do not emphasize the importance of several entry barriers. This feature ensures that there is equality in terms of accessibility.
Diversity
Traditional banking system offers a specified range of services while diversity is a special element of crypto banking infrastructure. Crypto investment can offer growth in a wide variety of ways even amid a volatile market. In addition, we have seen the development of innovative concepts like crowdfunding. Crypto investors have the scope of raising funds for start-ups or entrepreneurial projects through this platform.
Energy Consumption
For comparative analysis, energy consumption is also a vital point. In a traditional banking system, the physical setup involves high energy consumption in the form of an air conditioning system, central surveillance system, and so on. Besides, each employee handles a computer system and each bank has an ATM. The overall energy consumption charge is considerably high. Crypto mining is an integral element in the development of cryptocurrencies, the transactional units in crypto banks. The process entails high energy consumption and many critics have voiced their views regarding the adverse impact on sustainable development.
A gradual paradigm shift
Slowly yet gradually, customers are opting for several crypto transaction-based benefits. Even loyal consumers can grasp the advantages of peer-to-peer networks. The unique features of decentralized blockchain technology are drawing the attention of crypto investors. As a result, outdated and mundane banking systems are giving way to the emergence of zeal in the establishment of crypto banks. Even famous traditional banks and financial institutions are now thinking of offering real-time unique services to customers.
Final Thoughts
It is entirely the discretion of the consumer as to whether he or she decides to select crypto banks over the traditional banking system or not. It is true that in terms of credibility and reliability, many customers may still opt for the traditional banking system. But crypto banks are having greater appeal in front of Millennials and Gen Z. Some of the biggest influencers and stalwarts in the contemporary market have come to the forefront as major advocates of cryptocurrencies and crypto banks. Doubtlessly, one cannot ignore the fact that traditional banking systems have stood the test of time and have preserved assets effectively. However, in terms of an innovative range of benefits, crypto banks will surely have an edge. Whether in a traditional banking system or crypto bank, one must follow the latest trends and market dynamics before investment.
