Crypto Banking: Benefits And Risks

_{Designed With Canva}

Prologue

Crypto banking is a new concept that connects people with cryptocurrency. It's the combination of both traditional and cryptocurrency banking methods where assets can be bought with fiat currency and cryptocurrency. Let's just say that crypto banking is the bridge between crypto trading and traditional trading.

Most times, the term cryptocurrency banking can be misleading as the coins are not controlled and regulated by central authorities. Exchange platforms that offer service of managing cryptocurrency aren't technically called banks. Cryptocurrency banking main purpose is to allow users get hold of a cryptocurrency and they can choose to save or spend it like traditional currencies.

Benefits Of Crypto Banking

Crypto Banking main benefits is that it allows users to use digital currencies just like normal currencies for purchase and withdrawal instead of the usual investment like other exchanges. Crypto debit cards are issued by the cryptocurrency exchange which works like normal debit cards. These cards are equipped with cryptocurrency which can be used to make online and in store purchase.

Some cryptocurrency exchange requires individual to create an account or wallet before applying for a crypto card. Furthermore, other platforms ensures their users to verify their identity by using the KYC (Know Your Customer) verification process.

Risks of Crypto Banking

With cryptocurrency being new and still developing, there are numerous risks that are associated with it. Apps built for trading and holding digital assets can be affected by these three factors:

• Crypto Market Volatility

The nature of cryptocurrencies tends to be volatile and investing in them is a lot of risks to hold. Crypto trading is different from other trade because crypto takes a lot of time before it's become stable. Even at the stable stage, the market can still fluctuate and anything can happen within the blink of an eye. So always perform your own research before buying a particular cryptocurrency.

---

• Crypto Fraud, Theft and Hacks

There's has been numerous scams and hacks since the launch of Decentralized finance (DeFi) Apps. Some fraudster tends to create a fake project and trick people into investing in their project promising them that the project will be successfully in the future. When the project has reached a certain amount of investment, the owners will then drop out of the market and make millions while the investors will be losing. So remember to conduct your research before investing in cryptocurrencies projects.

---

• Cryptocurrencies Are Not FDIC Insured

FDIC stands for Federal Deposit Insurance corp and this organization make sure that banks axre insured to prevent huge loss from traditional currencies. Cryptocurrencies are not FDIC insured which means that crypto banks aren't also insured. A user can lose his crypto investment if the company he invested on goes bankrupt. I hope in the future we'll see that cryptocurrencies are insured but until then make sure your research when choosing a crypto bank to invest in.

Future Of Crypto Banking

As the demand for cryptocurrencies is increasing, we hope to see some changes to the financial sector in the years to come. Here are some prediction that will likely happen in the future:

• Blockchain Adoption in Banking

The Blockchain which is a revolutionary technology has yet to be implemented in the traditional banking system. If banks should start using Blockchain public ledger in certain areas then it can increase transparency and reduce Fraud in all types of transactions.

---

• Fintechs and Banks Innovating Together

The union between banks and fintech is required if banks are expected to be competitive in the aspects of digital currencies. Furthermore, most banks like "Chase" have already begun the possibility of including Bitcoin as a legit asset and they could take advantage of this to increase profitablity.

Conclusion

In finance, there is always be risk attached to any investment. However, with Blockchain technology and crypto banking, the idea of a transparent crypto banking will be achieved in the nearest future and I hope we all see that future. Thanks for reading ⭐

_{10% to community account}