It is normal for human beings to be skeptical of innovations, which is what happened when Bitcoin was launched. After gaining ground and popularity, Bitcoin caught the attention of many skeptics, mainly from the mainstream financial system. These included CEOs and senior executives from prominent banks.
Despite their skepticism, Bitcoin has continued to grow in popularity and application. Today, even skeptics are starting to accept the reality of Bitcoin. Indeed, some of your initial concerns that Bitcoin could disrupt mainstream banking are coming true, and that’s not just in one way, but in many ways.
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bitcoin and banks
Bitcoin and Payments
The most obvious way Bitcoin could disrupt the banking industry is by transforming the way it rwe make payments. Traditionally, you would have to go through an intermediary such as a bank to make or receive certain payments. But the Bitcoin blockchain is decentralized. Eliminates the need for intermediaries to enable peer-to-peer payments.
Bitcoin peer-to-peer payments would rob banks of an important source of revenue. Banks usually charge some fees to process payments and since Bitcoin will remove these, the banking industry would have one less revenue stream.
Bitcoin and international remittances
Bitcoin could also affect the banking sector, making international funds transfers faster and cheaper. Conventionally, if you wanted to send money abroad, you would have to pay high fees and the money would stay days or even a week before it reached its 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 anywhere in the world at minimal cost. As the transaction takes place on the shared blockchain network, as soon as you send the money it will be reflected in the ledger and the recipient can receive it. You don’t need to pay any bank commission or transfer to intermediaries.
bitcoin and loans
Bitcoin could also affect the banking sector 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 several factors, including your credit history and assets. Many people are unable to access loans due to this screening process.
With Bitcoin, you don’t need a credit score. Bitcoin provides opportunities for users to lend and borrow on the platform. You apply for a loan and when a lender sees it and is impressed, you get the loan based on the agreed terms. Also, you get the loan instantly. With traditional banks, even if you get a loan approved, you may have to wait a while to get it. It may be the case that you need a loan for an emergency, and when you are approved, you no longer need it. Bitcoin can change all that.
bitcoin and savings
Bitcoin can also affect the economy. In the traditional banking system, people kept their money in their bank accounts. Banks may even provide special savings accounts. But with growing distrust of the centralized financial system, people are starting to shy away from bank savings. For example, a bank can hold your savings for whatever reason, preventing you from accessing your savings.
Bitcoin provides a better savings platform. Anyone can open a Bitcoin wallet and use it to save money. You would save money in a bank account the same way you would save in a Bitcoin wallet. However, the funds will be in the form of Bitcoins. Keeping funds in Bitcoin is advantageous because it allows you to control your money.
This is the relationship between Bitcoin and banking activities.