There’s considerable dissatisfaction the world over with the traditional banking sector, with some polls showing satisfaction is as low as 23%.
This dissatisfaction has led some to move away from traditional banking entirely, instead switching to crypto wallets and effectively becoming their own banks. But how are they making this move, and what features are available to those looking for crypto-only banking?
Sending and Receiving Money
There are several functions of a bank account, and two are sending and receiving money. These can both be achieved by crypto wallets. To send money, simply find the public key of the wallet you want to send to, and then complete the transaction. To receive money, give out your public key and wait for the money to be placed directly into your crypto wallet.
With traditional banking, it can take days to send and receive money, although this has been getting faster. But crypto banking offers transfers taking just a few minutes – although the blockchain being used determines exactly how fast a transaction will potentially be.
Replacing Traditional Interest Using Crypto
One of the traditional advantages to bank accounts has been their ability to generate interest for the user. But with interest rates on many accounts now being negligible, many are moving away and taking advantage of the ways to earn money with cryptocurrency. There are three primary ways to do this:
This is the staking of crypto to a network for a specific time. The crypto is then used by the network to verify transactions. In return, those staking crypto are paid rewards, which can be far higher than bank interest, even in a bearish market.
Yield farming is the process of pooling crypto assets into liquidity pools in return for rewards. It can often offer higher returns than crypto staking, but is also more complex, as it’s often necessary to move crypto between different pools to obtain the highest ROI.
This emerging service sees crypto owners lending their crypto. Those borrowing the crypto will then pay interest on the loan, thus earning the owner of the crypto money.
Advantages and Disadvantages of Crypto Wallets
Now, let’s look at the advantages and disadvantages of replacing a traditional bank account with a crypto wallet.
One big advantage is the speed of cross-border payments, as already mentioned. These can take days with traditional banking, but crypto can be exchanged internationally in a few seconds. Crypto is also a 24-hour service, operating 365 days a year. The traditional banking sector typically shuts down on certain days, inconveniencing many.
Another huge advantage is privacy. You might think bank accounts are secure, but there have been several high-profile cases of data being stolen. Banks can also easily see how you’re spending money. Crypto wallet transactions, on the other hand, are anonymous. Finally, there’s the advantage of moving away from the traditional banking sector, which many are now suspicious of and keen to distance themselves from.
But there are some disadvantages to crypto wallets. Firstly, there’s no way to recover assets in the eventuality that you forget your private key. Lose bank account details and it’s simple to regain access. Bank accounts also offer access to a far larger range of products, plus bank accounts come with debit and credit cards – digital bank cards for crypto wallets are not yet widespread.
Is Switching to a Crypto Wallet Worth It?
Many are considering switching to a crypto wallet. But while we would encourage everyone to have some kind of crypto presence, it’s not yet feasible for most to completely ditch their traditional bank accounts. This is because a traditional account is still needed for many important functions in society, including receiving wages and paying bills.
But, as crypto becomes more and more mainstream, the opportunities to move to a crypto-only set-up will only increase. Traditional banks need to evolve to appeal more to crypto users – something they can do using the KUNA Banking API – or risk becoming irrelevant.