Will Blockchain Tech Disrupt the Banking System?

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Everyone except bankers sees banks as a necessary evil. Simply put, these institutions are our best for managing finances and entire economies. But that will change very soon, as we are about to establish an entirely new monetary system that is safer, fairer and, above all, decentralized.

Of course, we are talking about cryptocurrencies and blockchain, which are already reshaping the world as we know it and introducing an alternative to banks.

Let’s analyze the major problems with banks these days and figure out what their ultimate downfall might be.

Main problems with banks these days

First, banks can sometimes be unreliable when it comes to their online services. Their apps are often down, making online banking services unavailable, meaning you have to go to the nearest ATM if you want to withdraw cash. More importantly, complex banking procedures may require a visit to your bank, as they are not available online.

Also, banks are expensive. Their fees are much higher than those of decentralized financial institutions simply because banks act as intermediaries between two parties and provide infrastructure. They are particularly expensive when it comes to cross-border payments.

With banks there is a lot of paperwork, which can create a backlog. Some transactions take forever to process, and the limits are often quite unfavorable.

Banks have a lot of information about us, with detailed insight into our spending habits, which can sometimes create a human bias and directly affect certain accounts. For example, thousands of people have their accounts frozen by banking systems, often for no good reason.

Finally, banks are not known for their security. You can lose your funds instantly and you certainly don’t want to be a victim of bank robbery, physical or digital. Of course, it’s less stressful if your money is stolen without a gun being pointed at you.

The code is the answer

With the introduction of the Internet, instant communication has become possible – people’s demands for faster and safer money transfers have increased. Yet banks could not meet the needs of their customers within the current financial system.

Over time, it has become clear that code is the answer and that the financial system needs an update. However, it wasn’t until 2008 and the introduction of Bitcoin that this became feasible.

Blockchain provided what we needed for a long time – a way to send and receive money without an intermediary, making banks effectively redundant. However, this was only the first step, as many banking services required the existence of banks. The good news is that the DeFi sector is now thriving and we are offering innovative decentralized solutions to replace traditional banking systems.

A good example of a DeFi solution is blue shift. Apart from being a decentralized exchange (DEX), it is also an asset management protocol that uses cash wallets to manage cryptocurrency assets. Automated Market Makers (AMMs) provide trade price calculations and control liquidity flow through the Blueshift protocol. Besides being a DEX, Blueshift is also a great platform to learn more about DeFi in general. Dedicated professionals with extensive experience in DeFi created the platform.

In addition to providing a fairer and more secure banking infrastructure, decentralized technologies have also introduced the concept of transparency, as we can analyze the code governing the protocol and ensure that it is not rigged in any way. This can build user confidence, unlike banks, which like to keep their internal protocols hidden from the public.

Final Thoughts

Will banks be forgotten in the future? Well, it’s hard to predict that, but their importance, influence and overall power will probably decrease in the near future. If they want to survive, banks must accept that global financial systems are changing and moving towards decentralized finance.

Moreover, banks must integrate this vision and reinvent their services by introducing and emphasizing decentralized finance. Even if that happens, one scenario is that people will love DeFi so much that they will completely overlook anything remotely connected to traditional centralized systems.

Everyone except bankers sees banks as a necessary evil. Simply put, these institutions are our best for managing finances and entire economies. But that will change very soon, as we are about to establish an entirely new monetary system that is safer, fairer and, above all, decentralized.

Of course, we are talking about cryptocurrencies and blockchain, which are already reshaping the world as we know it and introducing an alternative to banks.

Let’s analyze the major problems with banks these days and figure out what their ultimate downfall might be.

Main problems with banks these days

First, banks can sometimes be unreliable when it comes to their online services. Their apps are often down, making online banking services unavailable, meaning you have to go to the nearest ATM if you want to withdraw cash. More importantly, complex banking procedures may require a visit to your bank, as they are not available online.

Also, banks are expensive. Their fees are much higher than those of decentralized financial institutions simply because banks act as intermediaries between two parties and provide infrastructure. They are particularly expensive when it comes to cross-border payments.

With banks there is a lot of paperwork, which can create a backlog. Some transactions take forever to process, and the limits are often quite unfavorable.

Banks have a lot of information about us, with detailed insight into our spending habits, which can sometimes create a human bias and directly affect certain accounts. For example, thousands of people have their accounts frozen by banking systems, often for no good reason.

Finally, banks are not known for their security. You can lose your funds instantly and you certainly don’t want to be a victim of bank robbery, physical or digital. Of course, it’s less stressful if your money is stolen without a gun being pointed at you.

The code is the answer

With the introduction of the Internet, instant communication has become possible – people’s demands for faster and safer money transfers have increased. Yet banks could not meet the needs of their customers within the current financial system.

Over time, it has become clear that code is the answer and that the financial system needs an update. However, it wasn’t until 2008 and the introduction of Bitcoin that this became feasible.

Blockchain provided what we needed for a long time – a way to send and receive money without an intermediary, making banks effectively redundant. However, this was only the first step, as many banking services required the existence of banks. The good news is that the DeFi sector is now thriving and we are offering innovative decentralized solutions to replace traditional banking systems.

A good example of a DeFi solution is blue shift. Apart from being a decentralized exchange (DEX), it is also an asset management protocol that uses cash wallets to manage cryptocurrency assets. Automated Market Makers (AMMs) provide trade price calculations and control liquidity flow through the Blueshift protocol. Besides being a DEX, Blueshift is also a great platform to learn more about DeFi in general. Dedicated professionals with extensive experience in DeFi created the platform.

In addition to providing a fairer and more secure banking infrastructure, decentralized technologies have also introduced the concept of transparency, as we can analyze the code governing the protocol and ensure that it is not rigged in any way. This can build user confidence, unlike banks, which like to keep their internal protocols hidden from the public.

Final Thoughts

Will banks be forgotten in the future? Well, it’s hard to predict that, but their importance, influence and overall power will probably decrease in the near future. If they want to survive, banks must accept that global financial systems are changing and moving towards decentralized finance.

Moreover, banks must integrate this vision and reinvent their services by introducing and emphasizing decentralized finance. Even if that happens, one scenario is that people will love DeFi so much that they will completely overlook anything remotely connected to traditional centralized systems.

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