Within the last few years, you may have heard of Bitcoin and cryptocurrency. If you have heard of them, it is possible you have also heard the term “blockchain”. Blockchain is a type of digital record that uses cryptography to secure transactions through decentralization. Recreating or changing it, therefore, is difficult if not impossible for those who would misuse it. The applications for blockchain vary but the potential is great. They could be used for many different kinds of events that must maintain their integrity. Some examples are medical information, political or historical events, and financial transactions to name a few. When it comes to financial transactions, blockchain could become the wave of the future. Some people even believe blockchain may end banking as we currently know it.
One problem that continually plagues our current monetary system is theft. Paper bills, metal coins, credit cards, and other forms of payment are all susceptible to criminals who wish to steal them. In addition, these transactions are vulnerable to forgery.
However, completing the same transactions through blockchain would make them secure from criminals. In fact, due to the very design of blockchain, any financial transactions completed through its use should be secure.
Banks do offer a degree of protection when it comes to credit card fraud. Many will cover your losses as long as you are cooperative and report any loss of your card within 60 days.
But what if you could prevent credit card fraud from happening? This is what blockchain technology offers us, eliminating the need to use the bank at all let alone to cover those losses.
2. Eliminates Need for Banks
Eliminating the need for banks is one way blockchain could end banking as we currently know it. Using blockchain, you could complete the exchange of money without using a centralized server.
Information, such as financial transactions, in a blockchain is not only shared but continually updated. Because it isn’t held in a single location you don’t have to go through a bank to exchange money.
3. Blockchain May End Banking Because it Saves Time
Imagine yourself in a store where it takes several minutes to complete your credit card transaction when you go to pay your bill. Now image yourself using blockchain to pay for your transaction. It would go through almost instantly.
What is the reason for this difference? The fact that the computer located in the store you are in no longer has to “talk” to a bank or other financial institution to complete your transaction.
What about international transactions? The potential for time savings in these transactions is apparent. You would no longer have to convert currency through a bank to complete financial exchanges.
4. Lowers Costs
Over the last few decades we have all heard many people and businesses talk about going paperless. While this is a great goal in theory, it has yet to be put into practice in many instances.
Truly going paperless, though, would be possible with a blockchain. Since all of the information is shared over many computers there is no need to send information to and from a bank.
No print out has to be created. This saves time as well as supplies such as paper and ink. The savings of both of these lowers costs and eliminates the need to use a bank.
As you can see, there are several reasons why blockchain may end banking as we currently know it. It may be only a matter of time before banks become obsolete.