How Bitcoin Technology Could Disrupt Banking
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With the growing popularity of Bitcoin, could it end up disrupting the banking sector? This article explains several ways how this could happen.
It is common for human beings to be skeptical about innovations. And this was what happened when Bitcoin launched. After gaining ground and popularity, Bitcoin attracted the attention of many skeptics, especially those from the conventional financial system. Traders are also into bitcoin and to get the most out of their trading, they may use platforms like Bitcoin Profit. Also, these included CEOs and senior executives of prominent banks.
Despite their skepticism, Bitcoin has continued to grow in popularity and application. Today, even skeptics are starting to embrace the reality of Bitcoin. Indeed, some of their initial concerns that Bitcoin could disrupt conventional banking are turning out to be true. And this is not just in one way but in several ways.
Bitcoin and Payments
The most obvious way Bitcoin could disrupt banking is by transforming how we make payments. Traditionally, you would have to go through an intermediary like a bank to make or receive certain payments. But Bitcoin’s blockchain is decentralized. It eliminates the need for intermediaries to allow peer-to-peer payments.
Bitcoin peer-to-peer payments would deny banks a significant source of revenue. Banks usually charge some fees for processing payments. And since Bitcoin will eliminate them, the banking sector would have one less revenue stream.
Bitcoin and International Remittances
Bitcoin could also disrupt banking by making international funds transfer faster and cheaper. Conventionally, if you wanted to send money abroad, you would have to pay high fees, and the money would stay for days or even a week before reaching the destination. The reason for these delays and costs is the involvement of many intermediaries, including different banks and other entities.
With Bitcoin, you can instantly send money to any part of the world at a meager cost. Since the transaction takes place on the shared blockchain network, as soon as you send the money, it will reflect on the ledger, and the recipient can receive it. You don’t have to pay any bank or transfer fees to intermediaries.
Bitcoin and Lending
Bitcoin can also disrupt banking in the area of lending. It can make loans more accessible, cheaper, and faster to acquire. To understand this, let’s first go back to traditional banking. If you apply for a bank loan, the bank will assess your creditworthiness based on various factors, including your credit history and assets. Many people cannot access loans because of this assessment process.
With Bitcoin, you don’t need a credit score. Bitcoin provides opportunities for users to lend and borrow on the platform. You place your request for a loan, and when a lender sees and is impressed, you get the loan based on your agreed terms. Moreover, you get the loan instantly. With traditional banks, even if you get approved for a loan, you may have to wait for some time to get the loan. Maybe you needed the loan for an emergency, and by the time it is approved, you don’t need it anymore. Bitcoin could change all this.
Bitcoin and Saving
Bitcoin could also disrupt savings. In the traditional banking system, people would save their money in their bank accounts. Banks could even provide special savings accounts. But with growing distrust of the centralized financial system, people are starting to avoid bank savings. For instance, a bank may withhold your savings for whatever reason, making you unable to access your savings.
Bitcoin provides a better savings platform. Anyone can open a Bitcoin wallet and use it for saving. You would save money in a bank account the way you would save your money in the Bitcoin wallet. However, the funds will be in the form of Bitcoin. Keeping funds in Bitcoin is advantageous because it allows you control over your money.