US-based crypto exchange Kraken has announced plans to expand its products with intention to expand globally too.
Regulatory infrastructure for the cryptocurrency industry is unfolding from country to country, and the standard legislation for different regions varies from complete bans to considering Bitcoin legal tender. With the rise of countries looking to implement Central Bank Digital Currencies (CBDCs), there’s an ever-increasing look at how cryptocurrencies can benefit a country’s financial system.
Here are some of the ways Bitcoin ($BTC) can stand to complement the traditional financial system for both authorities and users of the digital assets industry:
Financial inclusion and greater access to banking
Bitcoin allows people who do not have access to traditional financial services to participate in the global economy. For example, individuals in underbanked or unbanked areas can use Bitcoin to store and transfer value without the need for a traditional bank account. It saves the requirement to get through red tape to open accounts and increases the participating users in the financial network. This is especially helpful for those looking to make global payments without relying on a bank, such as for international salaries and remittance payments.
Lower transaction fees
Bitcoin transactions typically have lower fees than traditional payment methods. This makes cryptocurrency an attractive option to make cross-border transactions and to use as a banking alternative to send larger payments, within regulatory limits.
Increased transparency and open-sourced nature
Based on blockchain technology, Bitcoin transactions are transparent and recorded on a public ledger, making it easier for governments and regulatory bodies to track and monitor financial activities.
Reduced fraud and no double-spending attacks
In the traditional financial system, fraudulent activities are generally carried out by scammers or hackers who have access to sensitive information, such as account details and passwords. Hackers can also exploit vulnerabilities in centralised systems to gain unauthorised access to financial resources.
On the other hand, Bitcoin’s decentralised nature makes it highly resistant to fraudulent activities. The blockchain network that Bitcoin operates on is secured by complex algorithms, which makes it almost impossible for hackers to manipulate or alter transaction records.
Furthermore, Bitcoin transactions are transparent and publicly available on the blockchain, making it easier to track and identify fraudulent activities. Any suspicious transactions can be quickly identified and investigated, leading to a reduction in fraudulent activities.
The innovative industry
Bitcoin’s decentralised nature has led to the development of various blockchain-based solutions that could potentially revolutionise the financial system.
For example, smart contracts can automate various financial activities such as loan disbursements and insurance claims processing.
Bitcoin as an investment opportunity
Countries that embrace Bitcoin and other cryptocurrencies can attract investment from companies and individuals interested in the technology. Bitcoin makes an alternative asset to hedge against inflation which can direct more to the asset without undercutting the fiat currency. More investors looking to Bitcoin and more companies working in the industry can also lead to increased economic growth and job creation.