For hundreds of years, the primary method of storing money and accessing financial services has been based on the current banking system. But like many other traditions, the archaic banking system is beginning to show the signs of its age.
At the same time, while the traditional banking system is on the ropes, disruptive crypto technology has arrived that allows users to become their own banks. Additional cryptocurrency-based services have since emerged that have put the spotlight on how behind the banking system really is. Furthermore, inflation rates exceeding what is offered by savings accounts makes banks a lose-lose situation.
How Crypto Is Beating Big Banks
In this guide, we dig into the many reasons behind why the crypto industry is beating the banking system and why there is no stopping the proliferation of cryptocurrencies.
Trust And Transparency
The number one reason why crypto beats banks is the unparalleled transparency that blockchain technology provides. Crypto consists of a cryptocurrency asset and a blockchain protocol that each coin underpins. Every transaction made with the native cryptocurrency is recorded into a distributed ledger called a blockchain.
The entire banking system is built on IOUs for other people’s money. Banks today rely on a technique called fractional reserve banking. This means that banks only need to keep a fraction of their customer’s cash on hand. The rest of the money the banks are allowed to reinvest, loan out, or whatever suits the bank’s interests at the time. This is all in addition to the nonstop account fees, overdraft fees, ATM fees, and more that banks charge just to access your own money.
Speed And Scalability
The next major reason crypto is beating the traditional banking system hands down is due to speed. Crypto transactions take seconds to settle, while even the international bank-to-bank transfer system called SWIFT can’t live up to its own name and settles after a slow and clunky three to five days depending on weekends, international borders, which banking institutions are being used, etc.
Cryptocurrencies are becoming even faster as time goes by. Bitcoin, for example, sends transactions in batches every ten minutes or so. Additional second-layer technologies such as Lightning Network are being built that make Bitcoin much faster and further leave banking transactions in its dust. Other cryptocurrencies take only a fraction of a second and technology is improving every day.
Cost And Convenience
Although Ethereum has come under scrutiny recently for its expensive transaction fees, most cryptocurrencies can send funds at a fraction of the cost of traditional banking services. Bank wires can cost a user a flat rate of $30 or a percentage of the money moved. Meanwhile, billions in Bitcoin have been moved for just a few dollars worth of BTC in fees.
Some challenges and risks come from being your own bank, but this can also be a lot more convenient. During early pandemic-related lockdowns, banks were closed. Losing a debit card during this time could leave a customer without any access to their funds. Even outside of the pandemic, trying to complete a bank wire over the weekend is impossible. But with crypto, you can send funds at any time to anyone of your choosing.
Inclusion For All
With cryptocurrencies, you really can send money to anyone of your choosing. In contrast,the customer you are transacting with must also have a bank account with the banking system. For many in third-world countries, this is impossible. For example, the country of El Salvador has many unbanked citizens who don’t have access to traditional banking services. The country has instead adopted BTC as legal tender allowing all citizens to be included in the financial system.
Cryptocurrencies don’t care about a user’s credit score or if the user is friends with the bank manager or anything else. As long as you have the coins with crypto-centric services like DeFi, anyone can access APY rates without any barriers or restrictions.
Rates And ROI
The decentralized finance movement has taken the most considerable dent out of the banking industry and put a spotlight on how poor the rates across banking are today. Rates on savings accounts across the US and abroad offered by banks are as low as 0.75%. With today’s inflation rates of 7% and higher, that 0.75% isn’t saving you anything – in fact, you are losing money by keeping money in a bank these days.
Staking cryptocurrencies or locking up crypto in smart contracts in exchange for a variable APY rate can lead to much better returns on investment. During peak DeFi popularity, rates were skyrocketing. Today, they reach as high as 14% APY when using PrimeXBT yield accounts. Banks can’t come anywhere close to such ROI.
Privacy And Protection
Among the more important reasons for crypto to be beating the banking system currently is due to privacy. With banks, they want to know everything about you so they can adequately report the intel to government agencies and related tax entities. Banks are also among the many ways a government can seize property from citizens by freezing accounts.
Each address is a series of cryptographic numbers and letters with crypto, providing a layer of pseudonymity and protection. The only time privacy becomes an issue with cryptocurrency is if the user sends the crypto to an exchange that requires a KYC process. KYC stands for “know your customer” and requires a platform to ask for personal details like a social security number, name, photo ID, and more. This information has found its way into the hands of hackers after platform user information was leaked. Cryptocurrencies also cannot be seized if the holder retains ownership of their private keys.
How To Beat The Banks With Crypto And PrimeXBT
PrimeXBT is a rapidly growing crypto trading platform that offers a wide range of cryptocurrency-based products and services that make the traditional banking system feel like a fossil. Registering for an account requires no personal details or KYC process, and thanks to cryptocurrency speeds, accounts can be funded in a matter of minutes.
There is no minimum deposit, and PrimeXBT has some of the lowest and most competitive fees around. Anyone can sign up for the convenience of one account that provides access to Covesting copy trading, yield accounts, and margin trading with leverage on more than 100 different assets. The list of trading instruments includes forex, commodities, stock indices, and a vast array of cryptocurrencies.
PrimeXBT replaces all of the products and services offered by banks in just a few clicks. Yield accounts, for example, let users access APY-generating staking services by connecting to top DeFi protocols from within the account dashboard. PrimeXBT also beats banks in the few areas they still can claim to hold their own. The award-winning platform has some of the best security protection, and customer service is available around the clock.
With products and services like that available from anyone’s fingertips through a mobile app or website browser, there is little reason to continue doing business with the aging banking industry.