Neobanks based on cryptocurrency, a bridge to transition to the era of decentralized banking

The incredible growth of the cryptocurrency market, or the digital asset, has coincided with the digitization of the banking system.

According to the IDEA, Morgan Stanley Research states that we are witnessing an “operational revolution” as traditional banks adopt advanced technologies such as blockchain, artificial intelligence (AI) and cloud computing in the near future, and crypto-banks are one of the important products of this modernization and revolution. are.

A crypto bank is a financial organization that offers financial services similar to traditional banks (eg, loans), but uses digital currency instead of traditional fiat currency.

Cryptobanks or neobanks based on cryptocurrencies combine the best features of neobanks and digital currencies to make transactions faster, safer and more convenient. Cryptobanks, or cryptocurrency-based banks, come in many varieties, from traditional banks licensed for cryptocurrency services to cryptocurrency exchanges with bank-like functionality.

Traditional banking has a close relationship with the government and is managed by a set of governance rules and specialized rules of central banks. These rules make the work both somewhat safer and more complicated, as a result, traditional banks are not as flexible and independent as crypto-banks.

Cryptobanks, like traditional banks, can perform any operation with the client’s assets: deposits (with regular interest payments), loans, currency exchanges, international money transactions and many other common operations and services.

An important difference between traditional banks and cryptobanks is related to security and insurance. Traditional banks are very safe, assets are insured and have strong security systems. Usually, even if a physical bank is robbed, the customer will not lose because of the insurance and other banking offices of the bank’s current system. If you take care of your personal and account information, no one can steal your assets or block your debit card in seconds when you lose it. In addition, all banks in the world are insured and insurance companies have been cooperating with them for decades. But banks and insurances themselves are not reliable in the new world!

The situation with digital currencies is a little different. Protecting your wallet and assets depends on your performance. If you lose information, your property may be stolen. If you lose a physical cryptocurrency wallet (hard wallet), you risk losing your currency. The state of cryptocurrency asset insurance continues to develop, and companies willing to insure crypto assets are on the rise, but currently still few in number.

Advantages of cryptobanks versus traditional banks

Cryptobanks allow you to safely store your cryptocurrency holdings, just like traditional banks do for your physical money. A crypto bank is very similar to a regular bank, but instead of holding fiat currencies like Rials or Dollars, your account contains digital currencies like Bitcoin.

With the advancement of technology and the entry of cryptocurrencies into the financial arena, crypto banks have emerged as an important component in the financial world. These banks, also widely known as blockchain banks, offer people new facilities that are not easily available in traditional banks and neobanks.

Next, we will introduce the advantages of crypto banks:

Blockchain technology and security

The use of blockchain technology, which is the basis of the work of many crypto-banks, prevents changes and manipulations in the storage of information and manipulations during the transfer of assets. Transaction information is stored in blockchain blocks and requires the network’s consent to confirm each transaction, this means that your information is kept in a secure environment and unauthorized access is largely prevented.

Transaction speed

Due to the use of blockchain technology, crypto banks make transactions almost instantly. You can send or receive money quickly around the world without worrying about geographical borders. This feature is very important in conducting international transactions and is considered one of the important services of cryptobanks.

Greater control over assets      

One of the advantages of crypto banks is that they allow you to manage and control your assets more precisely. You can easily store your cryptocurrency assets with yourself (non-custodial wallet), control them, make transactions at will and transfer your assets to others.

reduction in costs

Cryptobanks have lower transaction costs due to the absence of intermediaries as well as less bureaucratic structures. You can choose the most economical and cost-effective ways to carry out your financial transactions among the methods supported by these banks.

Access to global markets

Crypto banks give you access to global markets. You can easily use cryptocurrencies in your international and even domestic purchases and sales without worrying about the problems and costs of converting local currencies and take advantage of investment opportunities in these markets. This greater flexibility allows you to experience the world without borders.

Diversified investment in cryptocurrencies

Crypto banks allow you to easily and securely access the purchase and storage of various cryptocurrencies. This feature allows you to invest in various assets and get a good return on your assets and capital, along with other services.

Combination with other technologies

Crypto banks can more easily cooperate with companies and services based on new technologies, to improve the financial experience of customers. This means using modern tools in financial management.

Changing market roles and revolution in banking    

Crypto banks have gradually changed the roles of financial market players. They are known as a revolution in banking and help develop the digital economy. Separating from the legal complexities and removing the usual and unnecessary bureaucracies will be the foundation of this revolution. Crypto banks can act as a bridge between traditional banking and decentralized banking and pave the way to the future of the financial industry.

Transparent transactions and reduced fraud

Transactions of crypto banks that provide payment service decentralized and on the network are safe from fraud and fraud due to high transparency. This feature comes from recording transactions on blockchain networks. This transparency, if not used properly, can sometimes be a violation of privacy.

Provision of new resources (mining, staking)

Cryptobanks help provide new resources to users, almost like traditional banks print money! Mining of cryptocurrencies is one of the side activities of cryptobanks, which is considered as a kind of asset creation and can bring them side benefits with the investment and participation of users.

Conclusion

Cryptobanks have emerged as an important innovation in the financial industry and offer many benefits to customers, including the elimination of geography in the provision of banking services. But perhaps the most important function of cryptobanks is to pave the way from traditional banking to decentralized banking.