With the emergence of Bitcoin (BTC) in 2009 and the subsequent launch of many other cryptocurrencies, most of them decentralized, essential challenges have arisen for banks. Namely, they work under a fully centralized scheme, which prevents them from achieving the efficiency and convenience of specific functions of this new type of digital assets.
Centralization of banks Vs. Decentralization of cryptocurrencies
If we start from the centralized nature of banks and contrast it with the Peer-to-Peer (P2P) infrastructure of Bitcoin (BTC) and the majority of the cryptocurrencies, the storage of transaction information is the first significant difference between the two platforms.
While banks store all their users’ transactions in large accounting ledgers that remains on the central servers of each bank, the ledger used by the cryptocurrency transactions is distributed, meaning its replicated at each node of the blockchain network.
Cryptocurrencies offer faster transactions in comparison with banks
Another great feat of the cryptocurrencies, in comparison with the banks, is that a cryptocurrency transaction is conducted fast, almost instantly in the case of some cryptos, which is also another advantage of decentralization.
In the cryptocurrencies universe, the transaction takes the same amount of time, regardless of the day of the week, or whether it is weekend or not, but more importantly, for transfers and payments with cryptocurrencies there are no geographical boundaries.
Blockchain and cryptocurrencies can replace banks, undoubtedly
In addition to the advantages of higher availability of information and more autonomy and flexibility in money transfers, since no central body will restrict or control the amounts transferred, cryptocurrencies offer another advantage over banks, namely, the unbanked can access to manage their own finances through this type of digital assets, which also provide the benefit of their total portability.
The crypto wallet is available anywhere and anytime, no matter it is day or night, or weekend. The only condition is to have an Internet connection.
Jackson Bey was born and raised in Lethbridge Alberta but moved east when he was 22. Apart from running his own consulting firm. Jackson spends his time canoeing the many lakes of Ontario. As a financial journalist Jackson has published stories for CBC Business Online, as well as Buzz Feed and Motherboard. As a contributor to Billionaire 365, Jackson mostly covers markets and trade.