The rise of cryptocurrency is seeing many adoptions among individuals, investors, traders, and businesses. It uses a digital wallet for individuals to hold their funds. However, what exactly does it mean? Should you use cryptocurrency banking to hold your funds? Please read this guide to get the answers to these and more.
What is Cryptocurrency Banking?
Before knowing what cryptocurrency banking is, how about you first find out what cryptocurrency in itself is? This is money in digital format and is backed by a decentralized system. Its short form is crypto, and there are currently over 9,000 cryptos available.
So, what is cryptocurrency banking? This is a system that allows individuals to hold their funds in a digital wallet in fintech firms. It can also refer to the process by which financial service providers or financial technology firms manage digital currency. It has digital coins through which people trade. Digital coins are equivalent to cash in the traditional banking system. One of the oldest, most popular, and largest digital coins is Bitcoin. Another crypto with a massive appeal is Ethereum. Notably, some providers allow users to not only hold their digital coins with them but also earn some interest too.
Moreover, digital currency is not under a single unit, authority, bank, or financial institution. What does this mean? It is decentralized and under a blockchain system. Therefore, no bank or authority has control over its operations. This also means that the central authorities do not dictate or regulate digital coins.
Unlike the traditional banking system which mainly deals with managing cash and credit in banks and financial institutions, crypto banking is more focused on investing. The investors either buy or sell the cryptocurrencies on a crypto platform.
Notably, in the traditional banking system, people spend their traditional money. Similarly, cryptocurrency banking also allows users to use their digital money. There are exchange platforms allowing individuals to manage their cryptos through them. Therefore, you don’t have to stick to the old way of banking, when you can revolutionize and embrace the use of digital coins in crypto banking.
The Benefits of Cryptocurrency Banking
Why would an investor, trader, financial institution, or individual consider cryptocurrency banking? Some benefits accrue from the use of this system. What are they? These are
Allows Consumers Use Digital Coin Balances
As already mentioned, cryptocurrency banking holds digital coins for its users. In whatever exchange platform a user picks, they can use these coins to perform operations as they would when using cash in traditional banking. These include making payments and withdrawals. Therefore, once you have your digital coin in crypto, you can utilize it in different ways. This is much possible with the fact that many banks have embedded crypto into their products.
Helps in Making Online Purchases
When you have a crypto debit card, you can easily purchase items online, as they function more or less like the traditional prepaid cards. How does this work? First, you need to create an account with a crypto platform of choice. With the account or the digital wallet, you can go ahead and apply for a crypto car. If you are not a complete newbie and you already have a crypto platform, it can issue you with a crypto debit card. This is possible regardless of the exchange platform you are using.
Once you have the crypto debit card, you can load it with cryptocurrency. Remember, there are lots of cryptos in the market, and not everyone uses or invests with the same one. Therefore, chances are your merchant may not be using the same crypto as you. in some cases, they may not be accepting your crypto. So, what happens when you want to make an online purchase from such a client? The crypto debit card will come in handy.
Should You Try Cryptocurrency Banking?
As a newbie, you may be confused with the bulk of information surrounding cryptocurrencies on the internet. If you are considering crypto banking, you may be unsure whether it is the right move or not. However, knowing what you want may be a good starting point.
One of the things to keep in mind before making the move is that you need to buy crypto before you can manage it. Importantly, choose carefully where to buy the crypto from. You can go for the companies that allow you to buy from them, and hold it for you for free in their digital wallets.
Nonetheless, you can go for crypto exchange platforms that make the whole process easier. You don’t have to worry about exchanges as they are straightforward. For instance, if you have US dollars and want to get the crypto value equivalence in a digital currency of choice, PayPal and CoinBase are good options.
Moreover, some companies let you check your balance. So, if you’d like to keep doing this, ensure you buy from a company that allows the same. Additionally, if you would like to have more than one crypto, you can consider crypto wallets with adequate storage spaces.
Fintech Firms to Buy Crypto From
If you have made up your mind about getting started with cryptocurrency banking, you may be wondering what fintech firms you can go for. Remember, the rules around investing in the firms and service providers may vary. So, pick whichever works for you and your needs.
If you are a newbie, some firms already have a presence with mainstream banking services, and you can take advantage of them. The following are some of the firms you can buy from;
- PayPal; Allows for buying, selling, and holding of the crypto. Moreover, you can use the crypto balance to pay for purchases on this platform.
- SoFi; You can buy, sell and hold cryptos and the balances.
Importantly, before you choose a service provider to go for, be sure to check their fees and limit.
Embrace the Change Too!
The number of people embracing cryptocurrencies is growing. The other new system which is adjusting the traditional banking system with more convenience is cryptocurrency banking. It involves fintech firms allowing users to hold their crypto coins on their platforms. Importantly, beginners must know their needs and what the rules, fees, and limits of the firms of financial service providers are before they use their services. Going for those with a presence with financial banks and institutions is great for a start.
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