What if you could use your bitcoin to pay your rent or buy a cup of coffee? This is not just a concern for those hoping to use cryptocurrencies for everyday transactions. It could also have an impact on the way investors make decisions about what to buy since some cryptocurrencies can only be exchanged for other cryptocurrencies, making it difficult to make profits from them.
With its disruptive technology, blockchain can often be challenging for the mainstream to understand. One company trying to tackle this issue is bitcoin profit website, which has built a network of integrated software that allow users to convert digital currencies into cash and vice versa.
What Exactly is Cryptocurrency Banking?
The term crypto banking is a misnomer since the exchange companies and firms that offer these services aren’t technically banks. However, they do act as banks in many ways. Cryptocurrency banking refers to an exchange company or financial institution that facilitates the conversion of traditional money like dollars, euros and sterling pounds into cryptocurrency.
Benefits of Cryptocurrency Banking
One of the main benefits of cryptocurrency banking is being able to use your digital coin balance like any other currency to make everyday purchases or withdraw cash instead of keeping it as an investment. Cryptocurrency debit cards allow you to spend your digital coin holdings just as you would with regular cash.
Typically, crypto banks allow:
- Carrying out traditional banking functions such as holding funds with an account balance.
- Users can also earn interest on their deposits and, most charge a fee for their services, although some are free to use.
- Users can transfer funds between other users of the same bank/wallet provider, or they can transfer funds to another user using a different wallet/bank provider by using a peer-to-peer (P2P) service like PayPal.
Not all crypto banks will support P2P clients, but those that do can provide users with increased functionality and flexibility.
Drawbacks of Cryptocurrency Banking
If you are a newcomer to the world of cryptocurrency, finding an appropriate banking solution can be tough. For more information, check the below barriers:
- Lack of credit history: If a crypto user has no credit history, the bank will not want to take a risk on them by offering an account since there is no evidence that the user can repay loans or loan interest, manage their finances or control how much debt they have.
- Lack of an existing financial identity: A user often does not have an existing financial identity when starting a new blockchain-based application, which means they will have a hard time converting the cryptocurrency into fiat currency.
- Lack of trust and reputation: This is due to the lack of knowledge and awareness of blockchain technologies.
- Lack of data privacy: Crypto banks lack the important customer data required to generate credit scores.
In a nutshell, from the vicious disruption brought about by crypto banking, we could see future peer-to-peer loaning through crypto and more blockchain systems.