5 Key Reasons Crypto Payment Solution is Better than Traditional Banking
As the adoption of cryptocurrencies continues to grow around the world, their benefits are fast becoming evident for both individuals and businesses. As is already evident, these benefits will continue to drive more people toward adopting cryptos for everyday usage and it is only a matter of time before cryptocurrency surpasses traditional banking in terms of preference for transaction completion.
TL;DR
- Cryptocurrencies offer users the ability to operate without the regulatory constraints and high fees of traditional banks
- It eliminates the need for middlemen for transaction completion while completing transactions within a few seconds
- Crypto payment solutions, by the virtue of the blockchain, ensuring that users’ personal data stay personal and protected.
No Regulatory Constraints
It is quite common that national governments, through their designated financial agency, to regulate the mode and terms of operation for traditional banking institutions (both traditional banks and neo banks). This means that all bank users are bound, without hesitation, by these laws and regulations, even when they directly impact their personal and business transactions.
Some of these regulations could impose restrictions such as daily transfer limits and international transaction limits. Usually, these limits could affect businesses that rely on international partners, while local businesses could be hampered by daily limits.
All of these issues are only inherent in traditional finance. With cryptocurrencies, there are no restrictions or limits to daily transactions and businesses can freely conduct trades across borders. Clearly, this leverage has made cryptocurrencies more appealing to businesses that operate across national boundaries.
Cheap and Affordable
When it comes to transaction charges, traditional banks are further down the ladder compared to cryptocurrencies. Banks have transaction fees that are higher per transaction than blockchain-based payment solutions.
On average, bank typical charges between 0.5% to 5% per transaction. This rate also does not include certain fixed charges. This is according to Investopedia. On the contrary, transactions on the blockchain cost far less when placed side-by-side with banks. On average, Investopedia documents that blockchain-based transactions cost as low as zero, while most blockchains do not charge more than 1% in fees.
This shows a substantial disparity between blockchain payment infrastructures and traditional finance. It also means that users can save more with crypto payment solutions.
Eliminate Middlemen
Control and more control…that is what cryptocurrency offers. Cryptocurrencies give users (holders) the ability to freely access their assets as and when they wish. They could choose to move assets around without being monitored or held accountable.
It is quite common in traditional finance that national governments freeze accounts and make funds inaccessible to owners. This shows that users do not have full control over their funds and will have to turn themselves in at the call of the bank management or risk being sanctioned (account freezing or total forfeiture) at the discretion of the financial institution (or based on directives from the government).
By placing control in the hands of users, cryptocurrency eliminates the need for middlemen who could sometimes hold more than bank users.
Anonymity and User Privacy
This is yet another area where cryptocurrency payments outshine traditional banking payment solutions. It is a requisite for all bank users to provide their bio-data during the account opening process. A fraction of these details is usually contained whenever a user performs any form of transaction.
The destination account readily sees the account number of the sender along with the sender’s name, among other things. This shows that user anonymity and data privacy is non-existent using traditional banking channel.
On the contrary, all transactions on the blockchain stay anonymous while the entire transaction process is managed and executed through smart contracts. These days, many centralized exchanges now require users to complete a Know-Your-Customer (KYC) phase, however, this is only needed for fraud detection and money laundering. The entire transaction processing interface never involves revealing a user’s identity.
Identity Fraud and Theft
It is near impossible for identity-related fraud to be committed on the blockchain. The reason for this is already explained under anonymity. No user information is ever known, making it impossible for such a crime to happen in the first place.
On the flip side, identity fraud and data vacuuming is not new to banks and other traditional financial institutions. Banks store user data in a central location and ATM cards typically contain details that can be exploited by fraudsters to commit identity theft and identity-related fraud.
It only takes a smart hacker to get lucky and break into the system of a bank for such a person to steal user information for their heinous act.
Are Cryptocurrencies a Better Form of Payment?
Cryptocurrencies offer better forms of payment compared to traditional banks. Cryptocurrency is fraud-proof, faster, cost-effective, and also protects the identity of users.
Conclusion
From all levels of analysis, it is quite evident that crypto payment infrastructures far outweigh traditional banks and neo-banks in terms of the services offered and cost-benefit analysis. As crypto adoption continues to grow around the world, we can only watch to see the numerous benefits of cryptocurrencies over traditional banks. Cryptocurrencies will overtake banks, it is only a question of when.
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