Will Blockchain Tech disrupt the banking system?
All people except bankers consider banks a necessary evil. Simply put, these institutions are the best we have for managing finances and entire economies. But that will change very soon, as we are on the verge of establishing a completely new monetary system that is safer, fairer and, above all, decentralized.
We are, of course, talking about cryptocurrencies and blockchains, which are already transforming the world as we know it and introducing an alternative to banks.
Let us analyze the main problems with banks today and find out what may be their final fall.
Main problems with banks today
First, banks may from time to time be unreliable in their online services. Their apps are often down, which makes online banking inaccessible, which means you have to visit your nearest ATM if you want to withdraw money. More importantly, complex banking procedures may require a trip to your bank, as they are not available online.
Also, banks are expensive. Their fees are much higher than decentralized financial institutions simply because the banks act as intermediaries between two parties and provide infrastructure. They are particularly costly when it comes to cross-border payments.
With banks, there is a lot of bureaucracy, which can create delays. Some transactions take an eternity to process, and the limits are often quite unfavorable.
Banks have a lot of information about us, with detailed insight into our spending habits, which can sometimes create a human bias and directly affect some accounts. For example, thousands of people get their accounts frozen by banking systems, often for no good reason.
Finally, banks are not known for their security. You can lose your money immediately and you will definitely not fall victim to bank robbery, physical or digital. Of course, it is less stressful if your money is stolen without a gun pointing at you.
Code is the answer
With the introduction of the internet, instant communication became possible – people’s demands for money transfers to be faster and more secure increased. However, the banks could not meet customers’ needs within the current financial system.
Over time, it became clear that code is the answer and that the financial system needs an update. However, it was not until 2008 and the introduction of Bitcoin that it became feasible.
Blockchain provided what we needed for a long time – a way to send and receive money without intermediaries, which made the banks effectively redundant. However, this was only the first step, since many banking services required the existence of banks. The good news is that the DeFi sector is now flourishing, and we are coming up with innovative decentralized solutions to replace traditional banking systems.
A good example of a DeFi solution is Blueshift. In addition to being a decentralized exchange (DEX), there is also an asset management protocol that uses liquidity portfolios to manage cryptocurrency assets. Automated Market Makers (AMMs) provide exchange rate calculations and control liquidity flows through the Blueshift protocol. On top of being a DEX, Blueshift is also an excellent platform for learning about DeFi in general. Dedicated professionals with extensive experience in DeFi created the platform.
Apart from providing a fairer and more secure infrastructure for banking, decentralized technologies also introduced the concept of transparency, as we can analyze the code that governs the protocol and ensure that it is not rigged in any way. This can build more trust among users, unlike banks, who like to keep their internal protocols hidden from the public.
Last thoughts
Will the banks fall into oblivion in the future? Well, it’s hard to predict, but their importance, influence and general power are likely to wane in the near future. If they want to survive, banks must accept that financial systems around the world evolve and shift towards decentralized finance.
Banks must also incorporate this view and reinvent their services by introducing and emphasizing decentralized finance. Even if that happens, one of the scenarios is that people will like DeFi so much that they will completely neglect everything that is externally connected to traditional centralized systems.
All people except bankers consider banks a necessary evil. Simply put, these institutions are the best we have for managing finances and entire economies. But that will change very soon, as we are on the verge of establishing a completely new monetary system that is safer, fairer and, above all, decentralized.
We are, of course, talking about cryptocurrencies and blockchains, which are already transforming the world as we know it and introducing an alternative to banks.
Let us analyze the main problems with banks today and find out what may be their final fall.
Main problems with banks today
First, banks may from time to time be unreliable in their online services. Their apps are often down, which makes online banking inaccessible, which means you have to visit your nearest ATM if you want to withdraw money. More importantly, complex banking procedures may require a trip to your bank, as they are not available online.
Also, banks are expensive. Their fees are much higher than decentralized financial institutions simply because the banks act as intermediaries between two parties and provide infrastructure. They are particularly costly when it comes to cross-border payments.
With banks, there is a lot of bureaucracy, which can create delays. Some transactions take an eternity to process, and the limits are often quite unfavorable.
Banks have a lot of information about us, with detailed insight into our spending habits, which can sometimes create a human bias and directly affect some accounts. For example, thousands of people get their accounts frozen by banking systems, often for no good reason.
Finally, banks are not known for their security. You can lose your money immediately and you will definitely not fall victim to bank robbery, physical or digital. Of course, it is less stressful if your money is stolen without a gun pointing at you.
Code is the answer
With the introduction of the internet, instant communication became possible – people’s demands for money transfers to be faster and more secure increased. However, the banks could not meet customers’ needs within the current financial system.
Over time, it became clear that code is the answer and that the financial system needs an update. However, it was not until 2008 and the introduction of Bitcoin that it became feasible.
Blockchain provided what we needed for a long time – a way to send and receive money without intermediaries, which made the banks effectively redundant. However, this was only the first step, since many banking services required the existence of banks. The good news is that the DeFi sector is now flourishing, and we are coming up with innovative decentralized solutions to replace traditional banking systems.
A good example of a DeFi solution is Blueshift. In addition to being a decentralized exchange (DEX), there is also an asset management protocol that uses liquidity portfolios to manage cryptocurrency assets. Automated Market Makers (AMMs) provide exchange rate calculations and control liquidity flows through the Blueshift protocol. On top of being a DEX, Blueshift is also an excellent platform for learning about DeFi in general. Dedicated professionals with extensive experience in DeFi created the platform.
Apart from providing a fairer and more secure infrastructure for banking, decentralized technologies also introduced the concept of transparency, as we can analyze the code that governs the protocol and ensure that it is not rigged in any way. This can build more trust among users, unlike banks, who like to keep their internal protocols hidden from the public.
Last thoughts
Will the banks fall into oblivion in the future? Well, it’s hard to predict, but their importance, influence, and general power are likely to wane in the near future. If they want to survive, banks must accept that the financial systems worldwide are evolving and shifting towards decentralized finance.
Banks must also incorporate this view and reinvent their services by introducing and emphasizing decentralized finance. Even if that happens, one of the scenarios is that people will like DeFi so much that they will completely neglect everything that is externally connected to traditional centralized systems.
