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How Crypto and Blockchain Could Change Banking
Crypto and blockchain technology have received a lot of attention over the last decade, pushing past Bitcoin and trading fanatics and into the more mainstream world of banking. Blockchain technology is rapidly evolving and shaping how our assets are transferred, stored, and accounted for. These recent developments are foreshadowing the early stages of an entirely new financial industry and the opportunities that come along with it. Heres how the role of crypto could change financial services.
Establishing a decentralized ledger for payments prompts faster payment processing and lower transaction fees. Decentralized ledgers have the ability to be set up universally, and once established, transactions can be confirmed and added to the blockchain within minutes, eliminating the need for third-party entities such as banks or credit card providers who take high transaction fees during this transfer. This creates an opportunity for an economical way to submit payments across the border of different countries while also decreasing banking expenses due to the speed of transaction completion.
2. Custody of Funds:
Along with lower transaction fees, the secure custody of funds within crypto banking makes it easier for investors to transfer funds or pay out to individuals or entities overseas. The main benefit that lies within custody of funds for investors is the security in which it offers. Each transaction utilizes private keys, a complex combination of alphanumerics, which are used to conduct transactions and are extremely difficult to hack. These unique features and heavy security ensure funds can be stored and traded with little to no risk of interception or fraud.
Blockchain removes the need for credit line gatekeepers by making it more secure. Traditional banks and lenders underwrite loans based on the credit reporting system. In order for banks to get this information, they need to access personal information through TransUnion, Experian, and Equifax, opening up the possibility of identity theft, exposed personal information, and more. Using this information, banks and lenders determine the risk of the borrower. The higher the risk, the higher the interest rate and lower the borrowing power. Lenders offering loans using a decentralized registry allow for consumers to borrow with less restrictions, thus creating greater opportunity to improve credit score and payment history. With alternative lending using blockchain technology, a lower cost and more efficient way to offer lending using a decentralized registry of payments and a global credit score.
4. Yield Accounts
If you’re looking for a higher yield opportunity in a savings account, saving and lending in crypto may be a solution. Users are pulling away from banks and moving more towards being their own “banks” with self-custody cryptocurrencies. Not only is this a more secure option due to smart contracts in place, but it is also a faster and more efficient way to earn interest when compared to a traditional savings account. Not only does it offer added security for investors, but it also offers a unique earning potential for common consumers. Traditional banks typically provide savings options for consumers with an average interest rate of just .13%, while holding funds in a high-yield cryptocurrency account averages at about 6% with some rates as high as 15%. This may offer higher savings opportunities to consumers, allowing for more financial freedom, ease of use and transfer, and greater earning potential. With this, both businesses and consumers can step into the future of high-yield earning.
As more individuals participate in the cryptocurrency and blockchain market, the ability for large financial institutions to provide crypto banking will only increase. Banks can utilize the added security of cryptocurrency and the blockchain to encourage customer increase, investor activity, and transactions in a safe, more globalized environment.
Operating as a provider for white-labeling solutions, custom digital exchanges, and licensing, Shift Markets is working towards bringing businesses into the world’s fastest growing market in cryptocurrency. Our unique suite of products allow for our customers to excel in the world of blockchain while simultaneously watching their business and investments grow. Visit the Shift Markets home page for more information.