If you have been following crypto news until now, you know that cryptocurrency and its associated blockchain technology have completely disrupted the world of traditional finance. The blockchain encouraged the growth of crypto coins, NFTs, DeFI, and many digital assets. The idea behind these innovations was to address the shortcomings and pitfalls of conventional financial institutions and transform the traditional marketplace.
Know why the crypto emerged:
The blockchain made its debut in 2007 when faults of centralized bank management came to the forefront. As banks were steeped in debt but continued minting new currency, inflation rates spiked everywhere. This was when Satoshi Nakamoto stumbled upon the idea of a digital currency, Bitcoin. It was the first decentralized currency with an open-source code meant to resolve the issues plaguing traditional payment systems.
With Bitcoin, other cryptocurrencies started to appear. They seemed to function more efficiently where payments were concerned, unlike banks. The biggest downside is its volatility, making it hard for people to use them in everyday transactions. But with cryptocurrencies becoming mainstream, much of this problem will be resolved.
Ways in which crypto payment platforms are proving better than traditional payment platforms:
- Accessibility: Unlike banks that have fixed working hours and are not typically open for operation during weekends, cryptocurrency consultants are running round-the-clock. With banks, you may need to be present in person when transacting a large amount of money. However, there’s no such requirement when you use crypto payment platforms. These are discreet and anonymous; no one has to know how much money you transact.
- Inclusion: In the case of traditional payment systems, like banks, for instance, not everyone has access to the same financial provisions. Some groups can access favors like prolonged payment periods, soft loans, and low-interest rates, but this won’t apply to everyone using the bank. You need to show an impressive credit history or provide collateral to get loans. Traditional systems are not entirely fair; neither are they all-inclusive. However, with crypto payment systems, there’s no such discrimination. Anyone can pay using cryptocurrency, and no one is left out. Crypto has minimal entry barriers and remains accessible to one and all. They are beneficial for people in places with underdeveloped or limited banking facilities.
- Security problems: With traditional payment systems, there’s always the threat of cyber attacks and hacking. Instances of banking apps getting hacked aren’t new. Most traditional payment systems are susceptible to fraud and embezzlement of funds. The result? People end up losing their hard-earned money for no reason. Cryptocurrencies, on the contrary, run on the blockchain that is protected against security threats like hacks and fraud. Once recorded on the blockchain, transactions cannot be tampered with or deleted. Human interactions are practically negligible on the blockchain, making transactions way more secure than banks. Introducing smart contracts, for example, eliminates the possibility of corruption and fraud. These small programs run on the blockchain and involve the least human interaction. They run only when certain pre-defined conditions are satisfied.
- Slow transaction speeds: It takes a while to transfer money through traditional payment platforms like banks. Because of so many protocols, the process is time-consuming, particularly when sending a large amount of cash. Transaction fees can be steep, and taxes are imposed during international remittance. Cryptocurrencies, on the other hand, have lighting fast transaction speeds making it possible to send and receive crypto in a matter of hours. You can engage in far more transactions during the day; this advantage is a massive boost to the economy.
- Decentralized nature: Unlike traditional currency, crypto is decentralized and free from regulations or control by centralized banks and financial institutions. This helps to free them from biases. All transactions are anonymous and cannot be changed or compromised. Traditional payment systems have complete control over all your actions, and every transaction is transparent. Centralized payment systems are free to share data with anyone without warning.
Do you know that almost 70% of people residing in the African continent don’t have access to banking facilities? This can be a considerable deterrent to economic growth there. But crypto makes up for this deficiency by allowing people to send and receive money without an account. People can use their smartphones to make purchases and sales and transfer money.
While there’s still much speculation about whether the crypto payment platforms can transform the traditional marketplace, there’s reason to believe this may be a good thing. Using the blockchain can help traditional payment systems do away with fraud. Transactions can be speedier, and this can facilitate businesses everywhere.