The past few years have seen the launch and blossoming of blockchain technology. This technology also harbors other innovations like cryptocurrencies, DeFi, NFTs, and other digital assets. These innovations are mostly solving the concurrent problems caused by centralized monetary systems.
Blockchain technology dates back to the 2007 economic decline that saw the world suffer from poor central banks management. Many banks were already in debt, and they were also minting excess fiat currency that raised inflation rates in the world. Satoshi Nakamoto made a digital currency, BTC, as a remedy. This currency has a design to solve this issue and avoid such mistakes since it is fully decentralized. Nakamoto also made his source code an open resource for other developers to make similar innovations and solve the banking issues.
As a result, Cryptocurrencies were born, and now they function more efficiently than the banking systems. They also offer even better financial systems than banks. Currently the biggest drawback of cryptocurrencies is its volatility, as seen in the crypto fear and greed index. This makes cryptocurrency unable to be used in daily day to day transactions. This issue is widely expected to be resolved once cryptocurrency gains widespread popularity. Read on to learn why cryptocurrencies should strive beyond what banks can offer in the financial scope.
Cryptos Vs. Banking Systems
Cryptocurrencies are digital assets that function like traditional money and can serve as means of exchange. They are usually bought through crypto exchange platforms and stored in safe crypto wallets. These digital currencies are decentralized, and they operate in a very secure way with minimal human interactions. As a result, many now classify them as the future of the finance sector.
Banks are the current financial systems in the world. They offer financial support like loans, savings, and other transactions. However, unlike cryptos, they have many setbacks since they are centralized and subject to biases. They are also relatively slower than cryptos, and some charge too high interests on loans and some transactions.