Bank vs Crypto – Making a Choice

Over a decade ago, Bitcoin gained popularity worldwide. I think it’s important to note that today,  Bitcoin has achieved a position as the most well known cryptocurrency in the market. 

Over the years, blockchain has become known as the technology that brought Bitcoin to life. 

Advocates of cryptocurrencies often claim the main advantages over traditional banking systems: they are fast, and they are cheap – this mirrors the capitalistic society where people are drawn to efficient and reliable services at a low-cost.

When international businesses are faced with a choice between waiting 24 hours or more for a wire transfer or paying huge fees for express transactions, Bitcoin sure does sound like a good alternative.

So let’s see how far banks and crypto differ. 

Traditional Money vs CryptoCurrency 

So let’s start by distinguishing traditional money and crypto. To put it into perspective, the main difference between traditional money and cryptocurrency is that crypto is a decentralized and often global digital currency.

This also means that it is independent from the control of any government. As a result, many people prefer using cryptocurrency as they gain more control over their transactions. 

Advantages of Decentralized Financial System 

The main advantage of cryptocurrency is the ability to function independently. Most of the cryptos are based on P2P settlement systems and are fully operational at any given moment in time.

Due to its independent system, cryptocurrencies offer businesses and individuals many advantages wherein government entities often control banks and financial institutions.  

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Introduction to Cryptocurrency

Cryptocurrency is a form of virtual currency. These Internet-based forms of currency have real-world value equivalents but do not belong to any sovereign nations. Like fiat currencies, their value depends on many factors including demand.

The biggest value seen by users of cryptocurrencies is that they are not (in many cases) regulated by any one country. This gives their users a high degree of anonymity and immunity from general acts of currency manipulation that some fiat currencies are open to.

The Cryptocurrency Ecosystem

Much like how real-word currency is circulated and utilized, cryptocurrency is similar in many ways. For example, you need to either buy or earn cryptocurrency then store it in a digital wallet.

To use cryptocurrency you will need to find a vendor who is willing to accept the currency you have. To get an idea of this scenario, imagine you currently have US dollars. While overseas, some vendors may accept that, but others will want you to convert to a currency they accept.

As a broad overview, the ecosystem consists of:

Miners – These are the ones who invest in the hardware and tools needed to produce cryptocurrency. The process is time consuming and drains much resources.

Buyers/Sellers – These are the largest groups of cryptocurrency users. They use real money to buy or sell cryptocurrency, giving them real value.

Exchanges – Similar to banks, these digital entities allow users to trade cryptocurrencies. Here, you can either exchange one cryptocurrency for another,

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