The emerging ecosystem of cryptocurrencies and decentralized finance is changing the way the financial market and technology works. Along with this progress, the banking system has also changed. An economic system based on cryptocurrency can already fully replace traditional banking operations. What can we expect from electronic money shortly?
Hi everyone, this is Alex. For more than five years, I have been studying cryptocurrencies. A couple of years ago, they were perceived as something frivolous and short-term. Of course, there are still skeptics, but we should not ignore the impact that cryptocurrencies have had and continue to have on the world. Let’s take a closer look at them.
The Money of the 21st Century
This decade will see a massive proliferation of cryptocurrencies, which will cease to be mere additions to existing currencies and eventually become 21st-century money. Regulators are erecting the main barriers to virtual money, but that could change.
The position of the world’s two most populous countries, China and India, will be decisive. Their governments are just now beginning to reconsider their negative attitude toward cryptocurrencies. Modern society is moving toward cashless payments, but it is not cash that may disappear soon, but plastic money.
Due to the rapid development and growing popularity of smartphone payment systems seen in China, payment cards will become unnecessary. At the same time, the circulation of banknotes and coins for various reasons will continue.
Cryptocurrency and Banking Operations
Leaving aside the rare transactions for large companies, such as tightly tied to a physical location or accepting the worn-out foreign currency for collection, most banking processes are already digitized and automated.
Individual clients often use bank payroll cards. The latter is analogous to a current account, the primary source of income, the client’s salary, and expenses – payment of utility bills, purchases, and loans. The vast majority of legal entities also use current accounts. Can a cryptocurrency scheme that does not have a bank or other financial intermediary at its core be an alternative? Of course, it can.
Leading cryptocurrency exchanges offer deposits in cryptocurrencies at a rate that depends on the balance of supply and demand. Moreover, deposits are possible not only in cryptocurrencies but also in fiat money.
This area isn’t a problem either. There are more than a hundred venues where stabelcoins (tokens denominated in fiat currencies on a blockchain) are exchanged in P2P mode, and you can easily exchange, for example, a digital dollar for a euro and back.
The only niche where traditional banks have a monopoly is in crediting. Risk assessment and physical measures are the wall that separates this area from the virtual world. But even here, search engines and social networks will compete with banks in the next couple of years. To survive, banks need to take care of their evolution now.
It’s not a question of having a mobile app or a shell in the form of a neo-bank. It is decentralization instead of a rigid vertical; working with small teams instead of an expensive IT department; searching for new opportunities and niches, and not shaking before the regulator or demanding to organize a rescue picture, limiting new players’ access to the market.
Scientists from the U.S. presented research that says the energy for mining cryptocurrency is growing many times over. According to their information, this volume has already begun to exceed the annual energy consumption of several countries. The researchers explained that bitcoin mining is a threat on the way to zero emissions.
Scientists are calling on states to start regulating mining to reduce their carbon footprint. It is also noted that previously the cryptocurrency could be mined even on an inexpensive computer. However, the more cryptocurrency is mined, the more complex the algorithms that devices need to solve become. This means that more and more power is required for mining.
Eco-activists have long said that a compromise must be made between cryptocurrency mining and the impact on the environment. Cryptocurrency mining can be a massive waste of resources, not to mention pollution and carbon emissions. Already some consumers do not have enough electricity; it is wasted on the production of cryptocurrency.
To dive into the world of blockchain and cryptocurrencies, you need to have a variety of knowledge, which our website will help you learn. The entire Artex Global team works hard to create quality content that will be useful for you: we publish forecasts and reviews of cryptocurrency exchanges, for example, BitFlyer cryptocurrency exchange or Liqui cryptocurrency exchange, and answer our readers’ questions and explain the complexities simply.
I have been studying cryptocurrency for over 5 years. I have accounts in every exchange and I test everything on myself.
I want this market to be more understandable for everyone.