Cryptocurrency, a digital currency designed to work as a medium of exchange that uses strong cryptography to secure financial transactions, control the creation of additional units and verify the transfer of assets. Cryptocurrency has changed the way of financial transactions globally.
The massive change occurs in financial markets with the invention of blockchain technology. It is expected that crypto banking will become an entire part of the financial industry due to its impressive mining process. Cryptocurrency has an edge over traditional banking system for its decentralized transaction system which offers more flexibility to clients/users than the traditional centralized banking system.
Here is how crypto-currencies are shaking the banking industry – the Traditional banking system is centralized, hence its process is too much complex. This complexity can be minimized by blockchain technology by reducing intermediation. In traditional banking systems, any transaction can not be conducted without a bank. On the other hand, in the crypto transaction, no entity holds onto anyone’s money. Money is held on the cloud via the blockchain technology. Now a days the taste and preferences of customers are changed. They demand services without any complexity and also in a secure way. The blockchain technology is trying to serve customers according to their preference and would be a big threat to the traditional banking industry.
Crypto transactions are more efficient and cost-effective than traditional money transfer. Sometimes a crypto-cash transaction is either free of charge or incredibly low charge. A remittance transfer is difficult to undertake because of the higher fees, slow processing time, uncertainties and legal complexities. Blockchain-based systems would eliminate these problems. The blockchain technology has made crypto-cash more fluid and user-friendly to make a quick and convenient transaction from wherever they are.
Due to inflation and devaluation of money, people store hard cash at home rather than banking it. But in crypto bank money stays secure because the bank or government agencies can not devalue it. People with minimal financial knowledge can make sound investments without worrying devaluation.
Now, what must be done to survive? If traditional banks want to sustain, the big bank needs to become digitized and offer similar real-time services, which people are demanding. According to Anne Boden an American banker,crypto-currencies can present a threat but also provide some valid opportunities. She opined on Forbes: “I think that blockchain is likely to be used in certain aspects of the banking business, so probably for trade finance where you have lots of parties collaborating on a transaction, but I think you will see blockchain implementation in niche areas of the business, you won’t see it as a wholesale change for the banking platform.”As cryptocurrency is not granted worldwide yet, it is difficult to say that the blockchain can replace the banking industry. But it will definitely transform the banking industry.
The writer is a third yearstudent of Jahangirngar University.