In 2015, there were 25,000 commercial banks in the world. There will be 2582.8 commercial banks for every 100,000 adults by 2020. In 2021, the world’s crypto users will number around 300 million.
There are 525 cryptocurrency exchanges in the globe, according to CoinMarketCap. This means that at the time of writing, each cryptocurrency exchange has an average of 571,428.57 users. Users prefer crypto to banking with traditional banks, according to this data.
The reasons are not implausible. Among them are the following:
- Comfort
- Nature’s anonymity
- Possibility of massive profits
- Transaction costs are low
- There is no government control
- There is no bureaucracy
- Enhanced coverage
Let’s take a closer look at each of these arguments to see why so many crypto customers choose cryptocurrency exchanges to banks.
Comfort
Cryptocurrency exchanges provide their consumers with a variety of possibilities that they can carry out from the comfort of their own homes. Users can exchange their valuables for one of the approximately 19, 000 cryptocurrencies available on the market. However, in the banking system, such transactions are only permitted if the customer has a domiciliary account in a certain fiat currency. As a result, bitcoin consumers prefer to deal with cryptocurrency exchanges rather than traditional banks.
Nature’s anonymity
Because cryptocurrencies allowed on the blockchain are decentralized, a user’s cryptocurrency holdings remain anonymous. The majority of bitcoin exchanges allow users to create accounts without having to be verified. Furthermore, cryptocurrency users who keep their coins in private wallets do not require any verification in order to conduct transactions. No one knows who is in charge of a particular transaction. For their wallet addresses, users can also utilize pseudonyms.
Commercial banks, on the other hand, have the authority to access someone’s account, and the account holder’s name is always known. Some people prefer to interact with cryptocurrency exchanges rather than conventional banks because they want to be autonomous and anonymous.
Possibility of massive profits
The significant volatility of cryptocurrencies is one of the reasons why certain countries and banks are opposed to it. Regardless of this hostility, some bitcoin users opt to save their funds on cryptocurrency exchanges rather than in traditional banks. In a short period of time, this volatility could provide large returns on investment. There may not be any bank product on the market right now that can match Bitcoin’s returns in less than 9 years. Bitcoin has returned 46,334 percent on investment over the last nine years. In the last nine years, a Bitcoin hodler has received $463.34 for every $1 invested.
Transaction costs are low
Sending money across the world has been made very easy by cryptocurrency. The huge and numerous debits that are charged by commercial banks have discouraged some bank account holders from attempting to do so. This ought not to be so. Recently, it was seen that someone was charged only $0.12 to execute a $300 million worth of Bitcoin (BTC) transaction. If this was done through a commercial bank, they might have paid over $10000 for it to be completed for banks with lesser charges.
There is no government control
Some crypto users prefer cryptocurrency exchanges over commercial banks due to the option of escaping from government sanctions. Some governments, especially in the developing nations, could sanction the account of a political opponent in a bid to limit their financial capacity. This is commonly seen during election time. However, with cryptocurrency exchanges, such sanctions cannot be implemented since they are not in control of the funds of crypto users. This makes crypto users prefer storing their assets with cryptocurrency exchanges over commercial banks.
No Bureaucracy
For some huge transactions to be done, a commercial bank customer might be required to do a lot of paperwork, asked to visit some officials, and then wait for days before permission is given from the headquarters. At other times, after waiting for all this while, the customer might be told that the bank has no capacity to execute the transaction. This has cost some account holdings profitable opportunities since they could not meet up with the deadlines for transactions to be done.
The SWIFT system aided businesses prior to the development of cryptocurrencies. Cryptocurrencies, on the other hand, have given users access to even the world’s unbanked. To fulfill the needs of such users, Stellar Lumens (XLM) and Ripple’s native token (XRP) were created.
DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.
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