How can bitcoin completely disrupt traditional banking?

0
13
bitcoin technology crypto currency blockchain concept design

The finance industry has been undergoing a revolutionary transformation where digital technologies and advancements in Artificial Intelligence are transforming the traditional banking sector. Even if you have no prior experience in bitcoin trading, you can use bitcoinprime.software to execute profitable trades.

The so-called blockchain and bitcoin technology have only been around for around 10 years, and although this is rapidly emerging as a game changer in our industry, it is still young and immature. However, it has shown that the opportunities to revolutionize this industry are limitless. The significant challenge in making offline transactions easier is personal identity verification (IDV).

 These days, most of us have spent a significant amount of time growing up or, in the case of Millennials, having access to online banking facilities. As a result, banks have been quick to market new services such as password-free logins and mobile apps, but despite these efforts, they still fail at curbing frauds/identity frauds rampant in the finance sector alone.

Blockchain and bitcoin technology is an ingenious invention that can provide a solution to outdated financial services systems by disrupting the traditional flow of information between various third-party intermediaries, financial institutions, and institutions that deal with other essential elements of the supply chains in the finance and tech industry.

Blockchain technology is expected to bring about a paradigm shift in how we think about providing banking solutions for supply chain relationships. The below-mentioned portion evaluates the potential impact of blockchain technology on improving or disrupting traditional banking practices.

Global Economic Growth;

In the early days of bitcoin, many technology enthusiasts and venture capitalists looked to the digital currency to evade geopolitical conflicts, aid global economic growth, and even change governance structures across countries.

There’s no doubt that many of those dreams have been realized (or imagined), and, at this point, bitcoin looks very different than it did in 2009. With today’s mining network having a rate nearing that of many nation-states’ entire electrical grids, its legitimate use case has become apparent: it effectively serves as a digital gold standard for blockchain ecosystems.

Fraud;

The financial sector has witnessed increased fraudulent activities, leading to several warnings from regulators and governments worldwide. Also, most of us have at least once faked some kind of ID during our banking transactions, either via a fake address or using someone else’s card.

The traditional banking sector does not offer adequate identity verification facilities that effectively and cost-effectively curb such fraud. According to estimates, around 40% of consumer financial products and services frauds are due to identity theft. Identity fraud can be unlawful pretense or impersonation, false impersonation for obtaining a loan, or unlawful access.

Blockchain technology is expected to play a critical role in reducing such fraudulent activities by offering more effective ID verification services to customers and other stakeholders involved in supply chain relationships in the finance and tech industry. Financial Technology: Fintech has been a rapidly changing field that encompasses the financial services industry and technology in the last few years.

 The traditional banking sector remains the gatekeeper of most financial services, and it is expected to remain this way for some time. However, the Fintech industry has been responsible for providing solutions to various challenges in traditional banking, such as; Providing cheaper financial services, reducing corruption through transparency and effective auditing, reducing fraud, etc.

Bitcoin is expected to play a critical role in enabling the FinTech industry to create more impactful solutions that can help banks improve their business processes by streamlining digital transactions, effectively reducing the cost of operations and curbing fraud risks.

Complete Governance Over Capital:

The current capital market systems are known to facilitate most of the labor, goods, and service transactions across the world. According to estimates, around $80 million worth of transactions is taking place across the globe daily. Most of these transactions are in debt or equity form, making it extremely difficult for individuals and corporations to have complete governance over the capital.

Fintech companies have been working towards enabling their customers to have more control over their finances by providing innovative solutions such as; access to credit, micro-loans / lines of credit for small businesses, etc. The bitcoin technology is expected to play a critical role in making transactions across the capital markets easier, cost-effective, and transparent for all stakeholders. The transparency of blockchain technology will enable any financial services provider to offer cheaper financial products and services with complete governance over capital etc.

Lending and crowdfunding with bitcoin-based products:

Several intermediaries, banks, and traditional financial institutions have offered asset-backed lending and crowdfunding products. However, the conventional financial sector remains the dominant player in the traditional lending market, and with few exceptions, they often charge high-interest rates.

With the emergence of bitcoin and blockchain technology, there has been a growing tendency towards providing more decentralized financing through crowdlending and even cryptocurrency-based startups that offer us a wide range of product availability for loans, equity investments, etc.

Bitcoin technology is expected to be critical in facilitating various financial services by offering more cost-effective solutions for any lending or crowdfunding requirements.