With the astronomical rise in the popularity of cryptocurrencies this year, does this new crypto technology have what’s needed to replace banks?

If you’ve recently joined the crypto bandwagon or have long been trading crypto, you were most likely enamored by the concept of being your own own bank. An investment proposition that does not involve high fees and charges by banks may also have wheeled you in crypto trading. The idea of gaining total control over your finances and future seems like an excellent option than traditional banking. But can it really deliver on the promise of a stable and prosperous future without time-testing banking and financing, let’s find out!

The exponential growth of the cryptoeconomy has swept all over the globe. It has evolved significantly, with the wide array of DeFi protocols fintech firms, and other crypto firms that make up the extensive cryptocurrency structure that we have today. It is perceived that cryptobanking is a compelling alternative to traditional banking and financing systems. And with banks minimal to zero-interest rates, the cyrptoeconomy is fast becoming an attractive alternative to beginners and seasoned investors. 

With crypto direct deposits and debit cards to efficient cross-border payments and decentralized savings and lending platforms, the crypto landscape is challenging the fundamental concepts of money and how it can grow over time. 

Paycheck Direct Deposit Feature

Cryptocurrency and fintech companies now enable direct deposit feature onto their platforms. This makes it relatively easier for users to convert or directly receive traditional payments in their preferred cryptocurrency. 

For instance, Coinbase now enables users to receive direct deposits into your account. This facilitates the seamless and smooth flow of cyrpto trading and spending via their own own Coinbase card. Additionally, users may earn crypto rewards with regular use of their Coinbase card for transactions. Additionally, users may opt to have their checks deposited in either crypto or their preferred traditional currency, with the ability of depositing as much or as little of their paychecks. And the best part is there are no fees involved in such transactions. 

Some banks have realized the impact of crypto over the short or long-term basis. In fact, even the biggest banks are now starting to integrate crypto directly into the accounts of existing account holders. 

In 2021, Vast Bank in participation with Coinbase, became the first federally chartered bank in the United States. Vast Bank now offers account holders the ability to buy, sell, and custody cryptocurrency using their traditional checking account. 

The Growing Popularity of Crypto Credit and Debit Cards

Once you have crypto under your name, you’re probably wondering how you can spend them. 

Visa has made great leaps in connecting crypto and blockchain networks to its reputable, global network. To date, Visa currently has over 50 crypto wallet partners connecting over 70 million merchants all over the world. 

Coinbase customers can now sign up for a Coinbase Card that functions as a debt card, allowing customers to spend their crypto at any merchant in Visa’s global network while at the same time earning rewards for every purchase. Combined with Coinbase’s direct deposit feature, Coinbase Cards shows a significant step towards the adapatation of a self-sustaining cryptoeconomy. 

Staking 

Cryptocurrencies are now using “Proof of Stake” consensus machines that ensures all transactions are secured and verified even without a bank or payment processing system in place. This is a helpful tool in a decentralized network such as the crypto landscape as it offers protection among users.

With certain cryptocurrencies, users can even earn rewards simply by contributing to the security of the crypto network, by locking some of your holdings into a staking pool within a certain period. This is an excellent way to plan and hold onto your crypto for a longer period, instead of having them sit without purpose. 

Turn Dollars into Stablecoins

One potential drawback of staking rewards is that they are typically paid in the native cryptocurrency, which is volatile in nature. You can earn dollar-denominated rewards simply by buying and holding stablecoins like Dai and USD Coin (USDC). 

Explore Savings and Lending Possibilities via DeFi 

Near-zero interest via traditional savings accounts mean that inflation will influence and drive down the value of your money over time. If you want a higher yield on your hard-earned money and willing to take higher risks that come with breakthrough fintech solutions, DeFi protocols offer a better alternative. 

DeFi protocols use innovative contractors to enable transparent, peer-to-peer lending for potentially greater yields than traditional financial offerings. In this case, you supply crypto assets into a liquidity pool, and earn yield from your crypto being borrowed by other users.

To access DeFi apps, you need a self-custody cryptocurrency wallet. This will also help you receive and send crypto, as well as allow you to explore and interact with a wide range of crypto apps, including NFT markets to DeFi. 

Borrow Without Credit Checks

If you are looking for a line of credit that does not require you to navigate a DeFi app, you can also borrow up to $1 million via Coinbase using your cryptocurrency as collateral without having to undergo credit checks. 

Cross-Border Payments

One of the best features offered by cryptocurrency t its clients is its borderless nature. 

For instance El Salvador made history in 2021 when it became the first country to make Bitcoin a legal tender. It is reported that the government made this move to reduce costly remittances from overseas workers. El Salvador now has it owns Bitcoin app, Chivo that processes over $3 million worth of remittances. 

Citizens in developing countries and their families living overseas can now send across-the-border payments instantly with minimal processing fees. 

In many developing countries where traditional remittance payments charge high fees, cryptocurrency payments and remittances are fast becoming popular. Meta has even joined the bandwagon by partnering with Paxos and Coinbase that allows for digital payments through its program Novi. This feature allows users to transfer crypto between US and Guatemala securely with no fees involved. 

What is next for crypto and the financial system? 

We can see that traditional and new-age banking and financial transactions are merging. Cyrpto will likely become increasingly integrated with traditional payment systems and the banking infrastructure. Decentralized protocols will become more viable alternatives and processing transaction, from payments, investments, and cross-border transfers. 

If you are looking for expert consulting in managing cryptocurrencies and funds, you can trust Damalion to offer you a wide range of solutions to help you optimize your financial potential. With an extensive global service network, we aim to provide you with the necessary knowledge and experience to become well-versed in the fast emerging cryptoeconomy. From understanding the fundamentals of cryptobanking, investing your hard-earned money through crypto funds in the most attractive jurisdictions to knowing your options on how to diversify your crypto assets, we will be there for you at every turn. To learn more about crypto investing, funds, and other innovative financial solutions, reach out to a Damalion expert today.