New trends dictate new rules to all spheres of our lives, and the financial industry is not an exclusion. As the level of globalization increases in time, the old systems prove to be sluggish and inefficient. This is where new technologies step out into the light and offer an innovative solution.
Centralized banks and other financial institutions have been governing relations between people and organizations for ages setting up their own regulations and charging whatever fees they desire for resolving the problem of trust. Now with the invention of the blockchain technologies, finally, there is something to shake their fortress. How can cryptocurrencies alter the global economy and what problems can they help to eliminate? Let’s find out.
1. The lack of transparency
With banks, people have no control over their funds due to the lack of transparency. You send some money to your peer over the bank transfer and you have no idea about what’s happening to the funds or where they are located at the moment.
With cryptocurrencies, the situation is different. Since all transactions are governed by the code and registered on a public ledger, you can keep track of your transactions in a fully transparent manner.
2. Low or even negative interest rates
Traditional financial tools offer pretty limited means of multiplying your wealth. The interest rates offered by banks are pretty low and in some cases even negative.
Blockchain projects are a good solution for those who want to get passive income. The EUM Staking Program is one of the options as you can earn up to 6.5% yearly rewards for simply staking your coins in your wallet. The details are to be revealed soon, so stay tuned.
3. High transaction costs
If you need to send money to your friend or a relative overseas, get ready to give away a fortune for that. International money transferring systems charge 7% on the average for merely transferring your funds across the borders.
With cryptocurrencies, fees are pretty low. In fact, with some altcoins, there are no fees at all which makes them a perfect tool for international payments.
4. An excessive superstructure of middlemen
There are many areas of our lives where intermediaries are needed to govern the deals. Real estate, money loans, and betting – in the past, there was no way to manage the deals between peers without middlemen who took the lion’s share of profits to themselves.
Now that some actions can be verified programmatically with the help of smart contracts, intermediaries are not needed anymore, which can significantly help to reduce costs for managing deals between parties.
5. No solution for underbanked regions
There are still many regions worldwide where citizens have no access to banking services. They cannot pay with a card, they cannot take a loan to fulfill their goals, they cannot even make a deposit to earn some interest. Cryptocurrencies could become a great solution for such cases reducing the dependency on centralized financial services.
Blockchain is the new internet
The invention of the internet and making it available to the mass audiences was a big step moving globalization forward. Similarly, with all the benefits listed above, blockchain technologies have all the chances to revolutionize the financial industry.
The recent survey conducted by the Bank for International Settlements reveals that 80% of the central banks are already working on creating their own cryptocurrencies. Sweden, Japan, the European Central Bank are just a few big names heading the list.
This means that things have already been set in motion. Financial institutions are researching the new technology that can help them keep up with this globalization race and adapt to the ever-lasting changes.
What do you think of these new trends? Will the financial institutions find their way with the blockchain industry and implement the new technologies? Join our Telegram channel to discuss!