Is Cryptocurrency the new future of banking system?

Is Cryptocurrency the new future of banking system?

Introduction

When you sit to talk about the latest trends that the banking and financial industry has going underway, you might come up with the topic of cryptocurrency and its relation to the banking and financial sector. The latest buzz is that the Blockchain technology which is the record-keeping technology behind the BItcoin -is underway in the financial sector already. Does that mean the never seen before the future of our banking is here? To answer this, we also have to first understand that although, the Blockchain technology – the main technology behind the cryptocurrency has been already used in several areas with the financial services arena, including the international payments, - why are banks now readily creating their Blockchain systems?

 

What is Blockchain?

Before we begin to learn how cryptocurrency is changing the banking system, we must first learn about what Blockchain technology, the driving factor behind the cryptocurrency is.  Although some of you who have been following banking and cryptocurrency over the last decade might be very familiar with the subject.

For those who are familiar with this concept are familiar with the regular definition which says, ‘Blockchain is a distributed, decentralized and a public ledger.’

But, the definition is easier to understand than it sounds. When we refer to the term ‘Blockchain’ at the layman level, we mean that a Blockchain is 'literally' just a chain of blocks. Except that the word ‘block’ refers to the storage of digital information – termed as a block and the storage is processed in a public database, which is – the ‘chain.’

In simplicity, the blocks store all the transactional information like the date, time and the dollar amount of a purchase from a website operating on the Blockchain principle.  Further, the block stores information in the participants of the transaction, which often includes the purchaser and the merchant. And it is not a surprise to note that during the purchase, the block store the related information using a unique Digital Signature which acts as a username without using the actual name of the purchaser.

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Changing the Banking Industry

Now that we know what the Blockchain technology is, the next thing to know is that its emergence and the consequent growth of the Cryptocurrency have sent some cardinal shockwaves throughout the banking Industry. This has happened to an extent that Cryptocurrency has changed how people conduct their financial transactions on a global level.

From simple transactions of money transfers to the payment of goods and services, the use of cryptocurrency has left ramifications to the global cryptocurrency market as well as the entire Financial Services industry. To quote a financial observer, “The Blockchain Technology and its accompanying cryptocurrency have been integrated into the pertinent aspects of financial transactions.

There are many reasons for crypto currency’s impressive uptake in the financial industry. Most recently, it is being expected that in no time, ‘crypto banking’ will become an integral part of the financial industry. Some of the other example of its impressive and popular adoption into the financial service sector is that now, some banks in the United States (US) have started to create their Blockchain systems, including the digital currencies such as Bitcoin, Litecoin and Dash, to enable the Business to Business (B2B) cryptocurrency payment for their customers.

Since the cryptocurrency is a decentralized system, they not only offer conventional banking services, but are also more efficient, secure and transparent and also offer a reduced bureaucracy.

Having mentioned all that, let us move forward to knowing the advantages that Cryptocurrency has to offer to the banks, Or in other words, how the Cryptocurrency has revolutionized the banking system.

 

Revolutionary advantages of Cryptocurrency

While there is a lot of speculation and discussion about the benefits that the advancement of technology has brought to the financial service industry, it has also led many banks vulnerable to the danger of data hacks and breaches and also other compliance issues.

 

 

 

 

Conclusion

Since the cryptocurrency has all the numerous above mentioned revolutionary features, it has certainly set foot in the financial services industry as a major technology player in drastically changing the entire banking sector. More on cryptocurrency in the banking sector will be talked about in the next blog, but meanwhile, it is safe to say that indeed cryptocurrency is the new future of the banking system.

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