Cryptocurrencies have had an incredible year, surpassing the $3 trillion mark at one point in 2021. According to Chainalysis research, crypto adoption increased by more than 2300% in 2021 as compared to 880% in 2020. This adoption was mainly seen in developing nations of Asia, including Vietnam, India, and Pakistan, proving that crypto has been easily accessible to emerging and under-developed nations where banks have failed to create a suitable foundation.
With easy internet access, crypto has expanded to every corner of the globe, thanks to its features like fast and cost-effective transactions, transparency, complete ownership of money, and strong privacy. The flippening of TradFi has begun with crypto reaching the ends of the world.
Banks Fail to Reach Billions
Banks have always been plagued by many challenges. One critical problem is that the majority of banks deliver services through intermediaries who demand high fees. For example, making a large purchase of a house, car, or land involves a lengthy procedure with several hoops to go through, including attorneys, notaries, and other professionals that cost an arm and a leg.
Another issue is that banks are centralized, which means they are controlled by the authorities, raising the possibility of devaluation or theft. Moreover, today’s banking infrastructure is such that banking services are inaccessible to around 1.7 billion adults worldwide.
Similarly, the sluggishness with which TradFi service providers, including banks, operate has been a complete headache for customers. To make things worse, several banks have been the victims of different scams and identity thefts. According to the Federal Trade Commission (FTC), approximately 4.8 million identity theft and fraud claims were registered in 2020 in the U.S, representing a 45 % increase from 3.3 million in 2019.
Crypto Brings Financial Services to Everyone
Although banks have retained their dominance in TradFi, they have failed miserably to reach a major chunk of the adult population. Thankfully, with the advent of cryptocurrencies, finance has become much more accessible to the masses and it is successfully banking the unbanked and underbanked. The entry barrier of opening a bank account in TradFi has been replaced by easy-to-setup crypto wallets. These wallets have given users access to all global cryptocurrencies, loans, additional revenue sources, wealth-building resources, and easy money transfers to anybody anywhere in the world with just a smartphone.
Moreover, the blockchain technology underpinning cryptocurrencies has eliminated the need for third parties, dramatically lowering the time taken to settle transactions and the costs connected with them. Also, because of its decentralized nature, no single person or institution is able to control, devalue, or take away the funds from consumers, offering them complete control over their money.
A rising example of a crypto platform offering easy accessibility to financial services through crypto is Coinovy. It is simplifying crypto for everyone by making it easy for them to buy, sell, and trade securely. While providing transparency and efficiency to everyday digital asset finances, Coinovy also intends to bridge crypto and traditional economies.
With its decentralized digital finance application, Coinovy is simplifying fintech through crypto to fiat (C2F) transactions along with giving bank-like features to the unbanked.
Crypto Over Banks: A Viable Alternative?
The present economic system is highly centralized as banks have complete control over the contemporary global financial infrastructure. They are dominating the economies of the vast majority of countries across the world. Although it has some advantages, this type of centralized organization concentrates too much power in the hands of a single authority that could result in severe economic downturns.
However, crypto could solve this as the technology behind it is based on algorithmic trust, and its decentralized approach could be a better alternative to the present system. With the advent of blockchain and crypto, the future of finance would be more transparent, fast, and secure.