Bitcoin is a digital currency and its operations are based on a decentralized network and are not controlled by any financial institution or government. In addition, blockchain technology introduces the ability of users to track all transactions that have been carried out. It can be said that the cryptocurrency uses very innovative solutions. However, not everyone likes crypto development – especially banks, which are afraid of losing its power in the financial world.
In the world about 1.7 billion adults do not have access to banking systems. For this group of people Bitcoin and other cryptocurrencies are ideal for making international payments. Every day BTC processes transactions worth 1 to 3 billion USD. Such data shows that the banking systems themselves have caused people to look for other financial solutions.
It is worth to explain what is Bitcoin and what are the main differences between banks and digital currencies
Decentralization is one of the most important concepts in the crypto world. It simply means that the Bitcoin network is not controlled by any government or financial institution. Bitcoin is intended to be used by ordinary people. There is no company that can directly control all transactions made with BTC. The transaction is recorded in a blockchain – a technology that records all the operations carried out on a given network. All you have to do is access your computer and you can already use the BTC crypto capability.
The government of a given country or other institutions have no influence on the course of a transaction using Bitcoin. This is different for banks, where the whole system is usually centralized and supervised.
BTC network users receive their own address, which maintains their balance. The addresses are created privately by users’ wallets, and this is the only information about the storage of bitcoins. The balances are public, but in reality it is not possible to recognize a person by the given address. You can also create a new address at any time and use it for free.
When you have a bank account, you must be aware that these institutions have information about all transactions. Additionally, they collect data on recipients and senders. Therefore, you can say that the use of digital currency is more anonymous.
Digital currencies have become for many a more convenient way of making transactions. Costs are much lower, no intermediaries are used and they are available 24 hours a day, 7 days a week – these are just some of the reasons why more and more people prefer to carry out transactions using crypto than traditional bank transfers.
However, various bodies such as the European Union and their money-laundering regulations offer a vision of a comprehensive and global crypto transaction system. One could say that they are trying to regulate and somehow oversee the cryptographic system. Opinions vary and are extreme. Some see it as an opportunity to revolve the whole banking system, others see it as an attempt to violate the rules on which BTC was built.
A serious financial crisis is currently underway, so investors are looking for alternative ways to protect their funds. One of the forms they are considering is of course Bitcoin. Recently, the Bank of China raised this issue and warned against investing in crypto in an official statement. Why? The Bank pointed to huge changes in the prices of individual digital currencies and numerous market manipulations.
BoC is not the first Chinese financial institution to present the world of crypto in a negative way. In November last year, the People’s Bank of China – the Chinese central bank – warned about the negative sides of investing in crypto. The entity issued a special statement, which referred to the cryptocurrency. The document was entitled “Enhancing surveillance and control to combat cryptocurrency trading” and contained information on the numerous risks associated with an investment in cryptocurrencies. It should be added that in China, crypto trafficking is as illegal as carrying out an ICO.
Bitcoin and other cryptos have certainly changed the entire financial market. Thanks to the use of modern technology, many people decide on this form of investment and financing. Therefore, some of the traditional payment methods used by banks must be abandoned. In addition, instead of rejecting the possibility of crypto, banks should take advantage of the possibilities that cryptocurrency can offer.
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