Blockchain Technology...The Traditional Banking Disruptor

LeoFinance
2 days ago
8 Min Read
1621 Words

Traditional Banking Has No Choice But To Get With The Program

Blockchain technology is essentially a digital ledger which is extension of the internet and marks a totally new period of the online world. In the early days of the internet, the internet was pretty much confined to data move. As the second period of the internet was created, it allowed individuals to exchange data.

The concept behind the idea of blockchain technology is that these blockchain records are logged and kept up by and large through the internet with the objective to establish a safe, trustworthiness environment that happens to be publicly available. The blockchain technology empowers the movement of assets without the requirement of third parties. By empowering individuals to move assets between themselves without the requirement for outsiders.

In early 2020, in order to use the online financial system, you had to have a bank account and a valid debit card. People store their money in several places. They include: their own savings accounts, checking accounts, their checking and savings accounts at banks, certificates of deposit (CDs), and money market accounts. They may also keep their money in their savings or checking accounts. The way that your money is stored in these locations is dependent upon your online service provider. If you choose to go with an online banking service, you will be provided with an online account or a virtual address that is not tied directly to your real identity.

Once you have an account you can move your money in and out of the online bank. You can either do this through your savings or checking accounts. You can also transfer money from your account to a merchant. You can make purchases from a website that accepts it, or you can purchase items from a physical store. If you purchase an item, you need to pay for it first. Otherwise, you send it through the same process of depositing the money.

Of course, if you choose to do business with an online bank, there is a fee associated with it. Most of them charge a one-time fee. However, if you decide to use a merchant account instead, they will also charge a one-time fee.

Fiat Going Digital

Digital money is simply a digital currency, which exists in digital form only. It is not a physical commodity like coins or other assets like gold or petroleum. Digital money may come from any source - fiat currency, fiat money tokens, etc. Digital currencies can also include cryptic, but they are not limited to them either.

The most popular type of digital money is fiat currency that is issued by any central bank in the world. Fiat currency can be used for almost any purpose, including making payments, receiving remittances, investing in stocks, shares, futures, and options, transferring funds between accounts, and more.
Fiat currency can also be used as a store of value, or as a medium of exchange. With fiat money, there is also a question of ownership and control of physical assets. If an ATM at a shopping mall is seized by government officials, they can seize the cash stored in the card, as well as any other digital assets. If an individual uses a prepaid debit card to withdraw cash from ATMs, he is then liable to pay for the costs of having the card seized if his card gets shut down.

image.png

In 2009, Bitcoin was born. The new digital currency is an electronic currency that would no longer require any centralized authority for transactions while ensuring safe, secure transactions. Termed, digital currency because the entire process is managed through the internet.
The only thing that distinguishes this popular online currency from other types of currencies is the fact that it is backed up by the value of the internet itself. Since there is no physical gold, silver, or diamonds that are used for the creation of this currency, this has become a type of virtual money that is used for trade of various goods and services.

Many people did not fully understand how this new money transaction system worked, but a major factor behind its growing popularity over other currencies is its unique characteristics that are used to secure it. These are known as its algorithms and these algorithms work very efficiently to make sure that transactions take place with great ease and without any kind of delays.

Due to the high level of security provided by this particular currency, in theory it’s not possible for hackers or anyone else to obtain access to this system. The best thing that it does is to offer complete protection from frauds as well.

Another major factor behind its growing popularity is the fact that it has an edge over other currencies because of its unique characteristics that are used to secure it. These are known as its algorithms and these algorithms work very efficiently to make sure that transactions take place with great ease and without any kind of delays.

The use of the internet has had a great impact on the overall concept of this currency and the whole idea has actually stemmed from the fact that there is a high level of trust that people feel when they are dealing with this particular currency. This is because they have realized that they can actually make use of their money without having to worry about the security and the safety of it.

One of the reasons why this currency is gaining a lot of popularity is because it provides many benefits that come with it. It is believed that this particular currency is the only way through which people will be able to make use of the internet safely. Due to the high level of security provided by this particular currency, it is not possible for hackers or anyone else to obtain access to this system.

There was a lot of worry about how the financial world would be impacted by the adoption of digital currency. Today, with the adoption of the Internet and the growth of the web, it getting to the point of potentially replacing traditional banking.

Fintech Going After Traditional Banking

Financial technology refers to the emerging technologies and innovations that aim to compete with the traditional financial sector. It's an emerging field that relies on advanced technology to facilitate activities in financial services.

The financial markets have been looking to finance fintech industry for many years and the recent boom has been encouraging companies to enter the industry and develop new ways to make financial transactions. There are various financial institutions that have begun to introduce fintech applications. Some of the existing financial systems such as banking, stock trading, and lending have also started to offer new services in terms of finance and financial products.

The application of fintech can vary depending on various industries and the different needs of the users. For instance, banking requires the use of online account applications provide its clients with easier financial services. The financial industry is also taking on a risk-based approach towards implementing the technology. Hence, there is a strong need to bring in risk management into the process and to ensure that users enjoy the benefits of the innovation.

Another area of focus for financial technology involves cross-selling. For example, it is increasingly important to increase the share of the product and the services offered by different companies. Financial institutions often work with other firms to help the clients find a suitable solution. In fact, these practices have become an important part of how companies to help improve their bottom line and increase the number of customers.

Square & Paypal Pioneering The Fintech Movement

image.png

Square, Inc. provides payment and point-of-sale solutions in the United States and internationally. The company's commerce ecosystem includes point-of-sale software and hardware that enables sellers to turn mobile and computing devices into payment and point-of-sale solutions.

Square is positioned to not only grow into new markets, such as mobile payments, but also take share away from larger financial service firms. Square started to displace traditional money management and banking services through their services like payroll management, invoicing, and business loans from Square Capital. For example, their Square card for merchants gives sellers immediate access to cash after a sale. In addition, Instant Deposit and Cash Card have been among the largest contributors to growth of their subscription and services revenue.

Back in April of 2018, Square allowed customers buy and sell bitcoins via its Cash App in all 50 U.S. states. Square believes cryptocurrency is an instrument of economic empowerment and provides a way to participate in a global monetary system, which aligns with the company’s purpose.

Don’t Forget About Paypal

PayPal Holdings, Inc. operates as a technology platform and digital payments company that enables digital and mobile payments on behalf of consumers and merchants worldwide. The company's Payments Platform allows consumers to send payments, withdraw funds to their bank accounts, and hold balances in their PayPal accounts in various currencies.

image.png

Square and their Cash App competes directly with Paypal and their Venmo. PayPal account holder can now store, buy, and sell popular virtual currencies. The announcement makes PayPal arguably the most significant company in the financial tech sector to adopt support for virtual currencies. As of November 20220, over 300 million additional people have the ability to buy and sell cryptocurrencies.

Conclusion

In the future, blockchain technology will disrupt many industries and sector and unleash new and upcoming companies, services and products. For the legacy companies such as traditional banks, they have no choice but to embrace blockchain technology or be extinct.

Posted Using LeoFinance Beta