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By Tatiana on November 234 min read
Section: Crypto World

Cryptocurrency: The Future Of Money? 

Satoshi Nakamoto created Bitcoin right amidst the 2008 world economic crisis to show people a better way to handle their finances. The idea seemed insane back then, but look what we have now ー digital asset sector is a trillion-dollar market attempting to make finances more accessible. 

What if we say that cryptocurrencies and underlying Distributed Ledger Technology can have a significant impact on the financial services sector shortly? Let’s list evidence for that claim and analyze why that is even possible.  

Blockchain In Banking Sector 

If you follow our blog, you may notice that more and more traditional banking institutions willingly embrace blockchain technology, recognizing its potential to transform the industry.  

Here is the list of some notable crypto-friendly banks that offer regulated crypto services:

⭕️ Société Générale (France) offers cryptocurrency trading and custody services. It also issued a tokenized security on the Tezos network.  

⭕️ SEBA Bank (Switzerland) started with an Ethereum staking service.  

⭕️ Union Bank (Asia) launched crypto & crypto-to-fiat trading services and is planning to create a digital asset exchange for clients. 

⭕️ Goldman Sachs allowed using Bitcoin as a loan collateral. Now it is building a crypto educational platform for institutional investors. 

⭕️ JP Morgan will roll out a crypto wallet and associated crypto financial services, including payments, exchanges, and transfers. Earlier, the bank launched its own stablecoin (JPM Coin) to speed up internal operations and established a Digital Assets department.   

⭕️ BNY Mellon offers crypto custody services for ETH and BTC. 

⭕️ USAA partnered with Coinbase to allow customers to manage their crypto holdings via bank accounts and perform crypto payments. 

⭕️Central Bank of Australia is implementing a research program for CBDC’s economic benefits under the lead of a former RIpple executive. 

American Express, Visa, and Mastercard incentivize users with crypto rewards and integrate crypto payments.  

Add Silvergate Capital, Black Rock Inc., and many other banks worldwide stepping into crypto research and blockchain-based services. And apparently, the list will only keep growing.  

Why Financial Service Leaders Advance a Digital Asset Strategy

Blockchain Benefits 

So why do all these institutions adopt cryptocurrencies? Using DLT in financial services solves many problems the traditional economy faces. Let’s give some advantages that blockchain technology brings into the financial world. 

Inclusivity (“Banking the unbanked”).

Setting up and maintaining a crypto wallet is easy and free. Unlike banking services, all the people in the world can afford decentralized finance (DeFi) perks. To give an example, Latin American countries heavily rely on digital assets to help survive the economic instability in the region. 

No Borders. 

Using blockchain, everyone in the world can connect and exchange 24/7 with no weekends. 

Security.  

Encryption and distributed ledger technology provide higher data security than centralized (and pretty much monopolistic) organizations.

Transparency and Trust.

Every operation on the blockchain is permanently recorded, unchangeable, and visible to everyone, while banking data is traditionally very closed. So blockchain may facilitate financial organizations’ audit processes and increase user trust. 

Efficiency

Bank transfers take ages while blockchain transactions are complete in minutes, and the scalability is only growing. For instance, the Elrond blockchain is capable of performing 250,000 transactions per second. 

Cost-Effectiveness.  

Banks spend tons of effort on maintenance and are bound to charge fees for their services, while blockchain technology is self-maintaining. At the same time, transaction fees on the blockchain are considerably smaller than banking fees. According to Juniper research, blockchain technology adoption may annually save banks up to $30 billion on payment processing and other operations. 

In other words, crypto seems to be enough to democratize the current finance system.  

Roadblocks to widespread crypto adoption in the Finance Industry

Regulatory clarity is one element that hinders cryptocurrency adoption. Nowadays, we witness attempts to classify and regulate digital assets. 

Thus, we recently reported that NY Fed teams up with major US Banks to launch the dollar’s digital version and the UK Parliament introduced a regulatory framework. European Union is also in process of elaborating a legal landscape for the crypto industry (MiCA). To add, Russia, pressed by sanctions,  is working on a digital rouble project and warms an anti-crypto policy. Iran is already using crypto as payment for imported products.  

Countries across the globe do explore digital currencies, CBDCs (Central Bank Digital Currencies) specifically. However, only comprehensive legislation on cryptocurrencies can lead to the highest degree of adoption.

Crypto in Financial Services: Threat or Opportunity?

Crypto is a revolutionary technology that can change many spheres of life. And it looks like the digital revolution of finances is already starting. Will cryptocurrencies replace money? Unlikely. Can crypto destroy banks? Not in the near future. But crypto may become a mainstream asset class and connect traditional financial services and a decentralized economy to make the world a better place. 

Follow the Noft Games blog to stay informed on more governments and companies entering the Web3 space; discover more educational content and updates to our cosmic NFT game! 

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Blockchain
Cryptocurrency
DeFi
Crypto Adoption