The world is becoming more digital every second. There are more digital payment options than ever before. Digital wallets and financial apps are so convenient that most people would gladly swap their cash and cards for them. This isn’t just a wild guess, we have research to back it up.
According to a recent finder.com survey, more than 110 million people in the United States prefer online to physical wallets. Besides the convenience, are there any other reasons to believe we can see a financial revolution in the coming decades?
What can trigger this supposed revolution? How can it trigger it? Does the financial system even need changing? These are some questions we aim to answer today. Let’s find out why and how Bitcoin has a chance to change the financial system forever.
Is the Current Financial System Efficient?
Over the course of the last 25 years, the global economy has been expanding quicker and quicker, thanks to growing Internet penetration. During this time, two of the main problems with the financial system reared their ugly heads: costs and security.
The time money takes to travel from one bank to another is absurd in the age of instant payment apps. However, security is a much bigger problem for consumers. A 2014 PwC survey revealed that nearly half of financial institutions – 45% to be exact – are breached by criminals each year.
Why are so many institutions attacked? For a couple of reasons:
- The entire financial system is too dependent on paperwork, which makes it outdated
- Because the system is centralized, it’s prone to failures and impervious to change
- The system is limited, leaving millions or even billions without basic monetary means
As you can see, the current financial system is facing many hurdles. Let’s see how cryptocurrencies like Bitcoin and the system they were built on can improve upon this system.
How Can the Blockchain Help?
Most people have originally heard about the Blockchain simply as the technology behind Bitcoin. However, Blockchain is much more than that. It’s a global ledger, running on millions of different devices, which can record anything valuable. That includes everything from money to contracts.
Every asset imaginable can be stored on the Blockchain. More importantly, the entire process is kept on peer-2-peer networks. This excludes middle-men from the equation and allows its users to remain completely private and protected. And that’s something the traditional system will never give you.
Furthermore, the network doesn’t need intermediates like government and bank officials to oversee the transactions. It monitors itself with encryption, network consensus, and advanced algorithms. We didn’t even mention how much money can Blockchain potentially save.
Several world-renown financial institutions feel like the Blockchain can help us save billions and billions. Capgemini estimates that customers could save approximately $16 billion in fees using applications on the Blockchain network. Santander puts the number at around $20 billion.
3 Reasons Why Bitcoin Could Change the Financial System
We’ve just scratched the surface. Let’s look at some consecrate reasons why Bitcoin and its core technology could potentially be the initial spark for the reform of the financial system.
1. Allowing More Secure Transactions
Bitcoin and the blockchain technology can help merchants, manufactures, and customers not worry about their money being stolen. Fraudulent activity is much less likely to happen on the Bitcoin network because all the transactions are tracked all the time, no matter how big or small they are. Plus, once completed, a transaction over the Blockchain is irreversible.
The technology is especially kind to consumers since it prevents identity theft almost completely. A standard baking transaction requires you to enter some of the most personal information, including your name, address, phone number, and even social security number. This data could easily be stolen during a traditional transaction. Since Bitcoin gives you complete anonymity, it eliminates ID theft.
2. Reducing Transaction and Process Fees
Have you ever wondered why it takes you so much time for the money to get from your financial app to your bank account? That’s because these transactions need to go through numerous hands and receive multiple approvals before they can get to your account.
The people who check this need to be paid. Naturally, the more people involved in the process, the higher the fees get. Bitcoin allows you to pay and get paid directly. That means, both the consumers and merchants have lower fees to pay. In some cases, the fees are less than 1%.
3. Creating a Global Financial Network
Last but not least, we need to talk about transparency and the role it plays. First off, it helps consumers see that they aren’t paying too much for fees. Naturally, this feature appeals to people in low-income countries that work online. It allows them to withdraw money without worrying about paying hidden fees. Not only that, but it also opens up the financial market to people from every corner of the globe.
Since there’s no centralized governance of it, crypto markets are available for trades 24/7/356 for people from all over the world. In the past, an Indian farmer didn’t have any access to financial networks. Today, that same farmer can easily use a network like NordikCoin to buy, send, and spend his cryptocurrency in less than five minutes, at any time he wants.
Recognize the Importance of Blockchain Technology
It’s more than obvious that Blockchain can be something that will change the way we live forever. Even mainstream media and large enterprises are catching on. In an effort to reduce data leaks, security breaches, and overall costs, financial giants like JPMorgan and Citigroup have started researching and investing in Blockchain technology.
While many people view these investments as opportunistic, the fact of the matter is they will only help popularize the Blockchain give people a preview of what can be done with them. Lower fees could be the factor that gets the ball rolling on revolutionizing the financial system. When enough people notice the benefits of Blockchain technology, things will start changing.
