Banks are notorious for requiring lengthy paperwork and in-depth background checks. They are also known to provide different products and limits to different groups of people, including payment durations, soft loans, limits, etc Bitcoin on the other hand was born to eliminate the need to trust third-party payment systems, banks, and brokerage houses. The global financial crash in 2007 was the catalyst for the creation of Bitcoin. Designed to provide a decentralized way in which people can manage their own money, digital currencies slowly infiltrated the greater financial markets.
Today, financial intermediaries’ role is to provide trust has emerged from the necessity of the direct connection between the two parties, thanks to Bitcoin’s underlying technology – BLOCKCHAIN
Blockchain technology has seen an incredible increase in interest in the last few years. While it provides a universal backbone relevant to almost any industry, it has also brought the world cryptocurrencies, NFTs, decentralized finance (DeFi) and other digital assets.
The Bitcoin network has a high level of security. Blockchain technology allows transactions to be carried out within a high-security framework thanks to its distributed cryptography infrastructure. No hack or theft has ever happened directly over the Bitcoin network. Infrastructure problems of low-security platforms traps are Ponzi Scheme; security weaknesses caused by people or intermediaries through fishing and similar means can cause such events to occur.
How Transparent Traditional Banking Systems
Leaked official FinCen documents revealed that five major banks – Deutsche Bank, HSBC, JP Morgan, Bank of New York Mellon, and Standard Chartered Bank – were laundering money.
The leak of The official Financial Crimes Enforcement Network (FinCEN) documents revealed that more than $ two trillion US dollars were laundered. As a result of this incident, financial institutions became sceptical about implementing AML laws. On the other hand, Dirty money still flows freely into infamous global banks.
Today, financial institutions should be able to handle transactional risk in real-time to protect their customers without reducing the customer experience or transaction process. This requires a compound of broad insights and specific tactics, including machine learning, artificial intelligence, real-time transactional data analysis, and greater collaboration across the industry to uncover potential criminal activity. Investing in technology and performing the necessary processes is essential in preventing financial crimes and other illegal activities with which it is often associated, such as human trafficking and terrorist financing.
Regulation plays an essential role in preventing financial crime, but regulatory compliance is not a magic wand, especially in a fast-moving industry. Financial institutions should consider the risks they face and take the necessary measures to reduce these risks and protect their customers.
Blockchain technology provides a safe and inexpensive alternative to sending payments that eliminate the need for third-party verification and beats standard bank transfer processing times.
By 2025, 90% of European Payments Council members believe blockchain technology will profoundly transform the sector. Trillions of dollars are lost now due to an archaic system of sluggish payments and hidden fees.
Banks profit handsomely from facilitating payments, so they have no motivation to reduce rates. Payments revenues from cross-border transactions, such as payments and letters of credit, totalled $224 billion in 2019.
Bitcoin and ether are based on public blockchains that anybody can use to send and receive money. Public blockchains eliminate the need for trusted third parties to verify transactions, allowing anyone all over the world to make quick, inexpensive, and borderless payments.
Bitcoin transactions take an average of 10 min to settle however in severe situations this might last for several hours or even days. That isn’t perfect yet, but it’s an average of three days of bank transaction processing. And because of their decentralisation and complexity, it is impossible for governments and regulators to regulate, monitor and shut down crypto-based transactions.
Major differences between cryptocurrency transactions and bank transaction
Banks are controlled and supervised by the government, but Cryptocurrencies are decentralized and not backed by any government.
Sometimes Bank faces a single point of failure and cryptocurrency don’t face any single point of failure, and this will be one of the reasons why many prefer Cryptocurrency transaction over normal bank transaction.
And one big advantage is Cryptocurrency transaction is a peer-to-peer transaction method and it will not have middleman services like banks.
In bank transaction, the government has some supervision to restrict some of the transaction and cryptocurrency don’t come under government supervision. Cryptocurrencies enable peer-to-peer transactions without the need for a regulated intermediary, allowing users to transfer funds instantly and without incurring transaction fees.
Transactions are simply connected to the transaction ID on the blockchain, rather than being identified by an individual bank account through a financial institution.
One of the easiest ways to buy Bitcoins is through crypto trading platforms. Today, almost all platforms comply with KYC (Know Your Customer) and AML (Anti-Money Laundering) principles. In line with these principles, users must declare their identity information while registering for crypto trading platforms. Some platforms allow users to make Bitcoin transactions without exceeding certain limits and without revealing their identity information to their users.
Most highlight results
- Cryptocurrencies can be an effective tool to secure financial inclusion. – %50 Agree %20 Neither Agree nor Disagree, %26 Disagree
- When thinking about the global use of cryptocurrency, do you think of it mainly as a risk or opportunity? – Risk%55, opportunity %26, Neutral %14
- Are you mainly worried about criminal activity or consumer protection when thinking about cryptocurrency risk? – Criminal Activity %61, neutral %20, Consumer Protection %17
- How prepared do you feel for cryptocurrency exchanges are to deal with and protect against the above cybercrime activities? – Unprepared %51, Neutral %21, Prepared %15
- Cryptocurrency transactions are compatible with sanction screening and transaction monitoring- Disagree %49, Neither Agree nor Disagree %19, Agree to %29.
- Cryptocurrency transactions offer more transparency than traditional financial transactions. -%54 Disagree, %17 Neither Agree nor Disagree, %27 Agree.
- Cryptocurrency service providers have a firm grasp on AML/CFT compliance. – %50 Disagree, %23 Neither Agree nor Disagree, %20 Agree.
- In five years, cryptocurrencies will be an effective tool for financial inclusion -%46 Agree%23, Neither Agree nor Disagree, % 24Disagree.