Traditional banking is the financial institution that is dedicated to the administration of the money that its clients deposit in custody and, on the other hand, the bank uses that money to grant it as a loan to individuals or companies, charging them interest. This is essentially the commercial activity to which traditional banking has always been dedicated. Since the internet has become an essential part of anyone’s life, this traditional banking has been displaced, giving rise to Fintech companies that have revolutionized the way of seeing the economy by introducing the use of cryptocurrencies in their transactions . Next, some of the disadvantages that traditional banking represents against cryptocurrencies.
It remains a major disadvantage of traditional banking, the slowness with which many officials operate when providing customer service since it always requires human resources to process transactions. Above all, when it comes to the end of the month, when most of the financial movements are made by the payrolls of the companies. Another factor is the time that transactions between banks can take, when it comes to different entities they can take even one business day.
On the other hand, transactions with cryptocurrencies are usually much faster, as we mentioned in the previous article entitled 7 myths about cryptocurrencies, we already mentioned as a myth the fact that transactions are instantaneous, however, if the fact of which are much faster than those made in traditional banking, especially for money transfers, for example we could put bitcoin whose transactions take approximately 10 minutes or Ethereum that has a higher speed, of only 12 seconds for their transactions to be verified
Commissions for accounts
Maintaining a checking account generates the payment of commissions for its maintenance and also for transactions that are made as withdrawals or transfers. These amounts may vary depending on whether they are transactions in the same bank (where they are minimal or nil) or transactions to other banks that are usually high, and if we talk about international transactions, commissions are usually very expensive.
On the other hand, cryptocurrencies are stored in wallets, as we saw in the previous article, what are wallets? Learn how to save your cryptocurrencies, the advantage of this is that they do not charge fees for their maintenance and transactions between wallets have quite low costs. Another very big advantage is that no additional charges apply for international transactions.
Irregular or deficient internet banking
While it is true that most banks now have an online banking service that allows online transactions, which represents a great advantage for users, it is also true that this online banking is tied to their products as Debit or credit cards to operate them and they are not at all transparent in terms of transfers and money management.
On the other hand, cryptocurrencies are the opposite in terms of the transparency of their operations because, as we mentioned in the previous article entitled blockchain: it knows its main characteristics, transactions are public and information about them is available for anyone who wants to access it, as long as it is part of the blockchain.
Another point on this issue is the fact that the operations carried out with cryptocurrencies are framed within blockchain technology, therefore they are decentralized transactions where there is no single entity that has decision-making power over all and there is also a single standard at the level global, unlike traditional banking whose standards may vary depending on the financial institution or country.
Little stimulus to saving
Due to the low interest that private banks usually pay to savers, since the traditional banking system promotes more credits than savings because, thanks to the interest they charge, they earn much more profit than just saving users’ money in Its coffers.
On the other hand, in the case of cryptocurrencies, credit management is not promoted because they could be a bit more volatile, however, the fact that they cannot be created constantly (remember that we had previously talked about the fact that we only they can issue 21 million bitcoins) stimulates users more to preserve their assets.
The obligation to go to the offices
When it comes to making a transfer or any other type of financial movement, you should go to the offices that will not always be close to your home or office, at a set time. This is a big limit because the schedules of the financial institutions generally coincide with the schedules of the companies, so to be able to go to a transaction in the bank one would have to ask permission at work.
On the other hand, in the case of cryptocurrencies the transactions are completely online, so it will not affect at all the fact that the financial operations have to be carried out at some specific time or place, since they can be done from the place where the user is whenever you have internet connection.
What do you think about this topic? Did you know these disadvantages of traditional banking?
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