What Cryptocurrency Means for Banking – Dan Schatt
Most people have heard of cryptocurrency at this point, and finance experts like Dan Schatt say usage is on the rise. And while many people may not understand exactly what it is or how it works, they know enough to say that they would never own it themselves because “It’s too volatile.”
Or “It will be hacked.”
Or, “I could just use my credit card if I wanted to buy something online.”
Yet, cryptocurrency is slowly but surely making its way into the mainstream, and it’s starting to look like a real contender against traditional banking methods.
Cryptocurrency, at its core, is a digital asset that uses cryptography to secure its transactions and control the creation of new units. Bitcoin, the first and most well-known cryptocurrency, was created in 2009 by the anonymous Satoshi Nakamoto. In 2011, Nakamoto disappeared from the scene and left behind a Bitcoin fortune worth around $19 billion at today’s prices.
Since then, despite several high-profile security breaches and fluctuations in value, cryptocurrency has gained traction among investors who truly understand its potential to disrupt international commerce.
In this article, we’ll explore some of the ways that cryptocurrency is shaking up the banking world and discuss why it’s starting to look like a real threat to traditional methods.
Cryptocurrency offers many advantages over traditional banking methods, including:
1) Cryptocurrencies are decentralized, meaning no single authority controls them. This gives users more control over their money and makes it more difficult for governments or financial institutions to interfere with or control the currency.
2) Cryptocurrencies are pseudonymous, meaning that user identities are hidden behind cryptographic addresses. This helps protect users’ privacy and makes it more difficult for third parties to track transactions.
3) Cryptocurrencies are global and can be used anywhere in the world. This eliminates the need for international currency exchanges and makes it easier to do business across borders.
4) Cryptocurrencies are secure and difficult to hack. Cryptography underlies cryptocurrencies makes it very difficult for hackers to steal or counterfeit them.
5) Cryptocurrencies are fungible, meaning that every currency unit is equally valuable. This prevents third parties from discriminating against certain types of users.
You may notice that these traits sound a lot like what most people look for in traditional banking services — making them something of an oddity when it comes to the cryptocurrency debate.
There are, however, a few key areas where cryptocurrency falls short of traditional banking. The first is volatility. Cryptocurrencies are extremely volatile, meaning their value can fluctuate greatly from day to day. This makes them a poor choice for everyday transactions, as the user could lose a lot of money if they try to spend them at the wrong time.
The second drawback is their lack of acceptance. Very few companies and individuals accept cryptocurrencies as a form of payment, limiting their usefulness in everyday life. In addition, there are still very few physical locations where you can use cryptocurrency to buy goods and services.
The third drawback is a matter of user safety. Many users lose money because they mismanage their private keys or improperly set up their wallets and exchanges. This is the number one reason why people lose money to cryptocurrency scams.
In closing, it’s important to note that cryptocurrency is still in its infancy and has a long way to go before it can truly compete with traditional banking methods. However, its advantages over traditional services are starting to become more and more apparent. As its popularity continues to grow, we’ll likely see even more disruption in the banking world.