With the rising popularity of internet businesses, the use of crypto coins for payment has also gained acceptance among the transacting parties. Unlike most traditional currencies, cryptocurrencies are virtual.
Bitcoin is the most commonly used currency of all the digital currencies available in the market. Other digital currencies used for payments and investments are Litecoin, Ethereum, Dash, Ripple, and Monero digital coins. Due to the nature of cryptocurrencies, a majority of governments has developed cold feet towards the use of these currencies in their areas of control.
It is important to note that digital currencies lack regulation and control thus making it hard for authorities to track their origin and use. Due to their nature of circulation, and lack of regulation from any regulatory body, it is easier for criminals to use them in furthering their missions that include money laundering, human trafficking, and drug trafficking.
Besides promoting vices and illegal trades, digital currencies are helping businesses sell more merchandise to their customers due to the elimination of traditional barriers such as geographical limitations among others. They are also making it possible to transact anonymously without leaving behind unnecessary traces. Therefore, with the ease of transacting using a cryptocurrency, most traditional currencies are finding it hard to cope with them, thus threatening the existence of the traditional banking system in many ways, including:
They bring dynamism in doing business
Traditional banking model is designed to play a mediatory role. However, the use of cryptocurrency employs a peer to peer (P2P) model which is more efficient in addressing the needs of the 21st-century customers who want their transaction to be closed there and then. Therefore, if the traditional banking system embraces this new model, they will definitely cease to exist.
They enable transacting parties to have faster access to the finances
With the requirement for clean financial history for individuals to access financial assistance from banks, most individuals, most of who have never had a bank account can now access financial services thanks to the peer to peer model of cryptocurrency networks. Unlike in traditional banking system, the entry requirements for anyone to join a crypto network are less restrictive.
They employ “embrace” or “obliterate” philosophies
When the world first witnessed the emergence of digital currencies in the form of a Bitcoin around the year 2009, the traditional banking system took their entry as a bubble that will burst in the near future. However, the world has kept seeing more digital coins emerge since then. At first, the banking system ignored them. With the current wave in the currency market, banks have no alternative other than incorporating them into their system. But if they ignore them (the digital currencies), it will be equivalent to signing own death certificate.
Digital coins are in the market to stay
With the successes that ICOs and Cryptocurrencies have recorded so far, it is evident that there’s advancement in the services they provide at a faster rate than what their traditional banking systems counterparts have provided for the last 100 or so years. With the current run experienced in the cryptocurrency market that takes advantage of the P2P framework, banks are at risk of ceding their market share to digital currencies. As a result, banks are growing increasingly concerned that the cryptocurrency is taking over some services that they traditionally offered to customers. Also, the cryptocurrency is redefining how things should be done in the financial market. Does this also mean emerging blue skies for coin dealers in the market today? We’ll see about that in the near future.