The future of decentralized banking is in your hands. No, really. Cryptocurrency – which is digital money – is easily accessible as long as you have a digital device handy.
The cryptocurrency market was valued at more than $250 billion in May 2020. To say the least, cryptocurrencies and blockchain technology are growing more popular and are revolutionizing what it means to transfer money in the digital sphere.
What Makes Cryptocurrency So Promising?
The success of cryptocurrencies comes on the back of an increasingly digital world. With everything being so accessible online, it was only a matter of time before a form of money was created that existed completely in the digital realm.
Cryptocurrencies are growing exponentially because of the following reasons.
- They Reduce the Need for Third-Parties
Cryptocurrencies are accessible without needing to sign up with a bank or look for a trusted institution. These currencies function in a system called decentralized banking or financing (DeFi), which are platforms that allow people to store, trade, and access financial assets without the use of intermediaries.
This is beneficial because it reduces the risk of failed transactions and having to find trustworthy institutions to go through. Another is that the transactions are instant – you give authorization and the money goes through. No fuss.
Cryptocurrency can be invested and can provide interest, just like actual money. You can also oversee the whole investment process, ensuring that you know where your money is going.
- They Provide Access to Unbanked Individuals
A survey by the Federal Deposit Insurance Corp found that unbanked and underbanked individuals in America made up to 25% of households in 2017. A lot of this is a result of not having enough finances to justify opening a bank account or simply a lack of trust in financial institutions.
Cryptocurrency, being independent, easily accessible, and boasting low transaction costs, is the answer these people are looking for.
Potential Risks of Cryptocurrency in Decentralized Banking
While cryptocurrency shows promise in defining the future of DeFi, scams and cyberhacks are pressing issues. The fact that everything is online and is not regulated means it is harder to shut down the systems when something gets compromised.
Decentralized exchange platforms such as Uniswap trades cryptocurrencies and are typically secure, but there is always room for error. To an inexperienced investor or individual, the steps to ensure extra personal safety may not be common practice.
Don’t log off just yet, though. This is how you can avoid Uniswap scams and crypto scams in general:
- Use trusted sources or analyze listed details to make sure they are risk-free.
- Do your research! Go through social media – if people experienced scams, they are likely to discuss it online.
Cryptocurrency is Promising, but Caution is Key
There’s no doubting it. Cryptocurrency’s role in decentralized banking is likely to keep growing as the world becomes more digitized.
Caution, however, should always be practiced. Even as the security systems continue to grow, we should still take preventative measures to keep our money safe.
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