Is Traditional Banking Compatible with Blockchain Technology?
Have you noticed that an increasing number of online companies are stating that Bitcoin will be accepted as a payment method?
This is a demonstration of cryptocurrency, a new generation of internet-based currencies that has increased in popularity in recent years. You can't physically touch it or give it to someone, but you may use it to trade online.
It's a far cry from the classic banking model, in which cash, coins, and potentially gold are stored in a vault ready to be withdrawn, but might these new cryptocurrencies pose a danger to established banks?
We're fascinated by all things technological, particularly when it comes to how we create and utilize applications. Cryptocurrencies have already found their way into FinTech app trading, so let's see how they stack up against conventional banks:
What are the ramifications for financial institutions?
A significant change has occurred in the way individuals do business and conduct transactions. Suddenly, currency may be traded outside of conventional banks in the blink of an eye using a cell phone.
According to Chris Skinner, author of Digital Bank:
"People who couldn't get trade or financing 10 years ago are now able to do so." This will help a lot of people get out of poverty."
This is an important point: individuals no longer have to go to a regular bank with their hat in hand if they need money. Peer-to-peer networks, particularly those based on cryptocurrency, are getting more popular, and people who might otherwise be turned down by conventional banks now have another option.
What should conventional banks do?
It all comes back to what Chris Skinner says in Digital Bank: major banks need to become digital and provide comparable real-time services to what customers are wanting with cryptocurrency to stay relevant.
Traditional banks have been accused of customer-unfriendly account manipulations, such as applying debits before credits and collecting fines for inadequate cash, he claims. Customers can see this occurring by looking at their phones in the digital era, therefore the major banks won't be able to get away with such activities for much longer.
Customer service, digital services, and fees imposed are all areas where traditional banks need to improve. They fear being left behind if they don't consider digital alternatives beyond the conventional mobile banking app.
These cryptocurrencies may be a concern, but they also provide some legitimate benefits, according to American Banker:
"Banks might play a variety of functions, including processing payments, offering escrow services, enabling international cash transfers, assisting consumers with Bitcoin exchanges, and even issuing Bitcoin loans."
While there are concerns about digital currencies' volatility and their potential to violate financial rules, their growing popularity indicates a change in consumer preferences. Traditional banks must embrace technology and provide the rapid, mobile services that so many people want.
Banks must also provide safety measures for users who are not familiar with cryptocurrency and blockchain technology. One major problem that new users have is losing their wallet seed phrases.
Serenity Shield is one solution that aims to resolve this issue that has stymied the Web3 area as a whole. If it is not resolved, some digital sectors may be unable to reach their full potential.
To secure digital assets, private key wallets are employed, and there are a variety of choices accessible to the general public. Private key wallets enable users to store assets without the need for third-party actors, however owing to the way the technology works, private key wallet providers and users are faced with a problem.
The more secure private keys are, the more difficult they are to maintain and pass down, which causes many users to forget their login credentials, passwords, and wallets to be stolen. Nobody knows how much money was lost in crypto assets owing to holders' premature or unexpected deaths.
When mourning families are unable to access the virtual assets of departed loved ones, it is a loss for the whole ecosystem, and when digital assets are locked away permanently, it is a loss for the entire ecosystem.
Serenity Shield is quickly establishing itself as the first "non-custodial" seed recovery solution. Users will be able to name heirs for their assets, making the process of handing wallets along easier; this is referred to as Digital Asset Legacy.
This company's solution will include a "StrongBox" with three non-transferable NFTS, each of which will hold a third of the secret required to access the wallet. The user will hold the first NFT, a selected successor will have the second, and Serenity Wallet will hold the third.
The Serenity Wallet is built on the Secret Network (a blockchain-based secret data storage system), and this smart contract will send the Serenity Wallet's key to either the original user or the heir depending on the circumstances provided during StrongBox activation.
Closing Thoughts
Is bitcoin posing a threat to conventional banking? Both yes and no. Most major financial institutions are now accepting that the technology underpinning cryptocurrencies should be considered the next great thing, similar to how the advent of the automobile was handled by the railroad.
Digital currencies, on the other hand, have drawbacks such as perceived volatility and uncertainty about whether authorities would be required to intervene.
Banks that don't want to follow in the footsteps of the early twentieth-century railways, which failed to perceive the automobile as a danger, should pay heed to customer demands. Getting on board with digital developments might help to lessen the danger of cryptocurrencies.
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