In cryptocurrency banking, most of the time, people can only keep their funds in a digital wallet or spend it like traditional money; people can manage cryptocurrency balances on exchange platforms.
The rise of cryptocurrency and its new blockchain-based mechanism had piqued the interest of traders, investors and financial institutions alike. However, the virtual medium is replacing the simple issue of currencies, just as people like to spend cash or bills. Recently, new services and platforms have been introduced to help people manage bitcoins and other similar digital currencies in everyday finance. Here’s what you need to know about cryptocurrency banking and its benefits:
What is cryptocurrency banking?
Bitcoin, the world’s largest and most popular cryptocurrency by market capitalization, is stored in virtual wallets with unique keys. Bitcoin and other digital currencies are the same as cash, but in electronic form. The virtual currency is not held in physical form. The digital currency is decentralized. Using ledger system called blockchain, which means it is not controlled by a bank or central authority.
Cryptocurrency banking is sometimes viewed as an imprecise term because digital currencies are not regulated by a central authority. Exchange companies and companies that provide digital currency management services are technically not banks. Most of them just allow people to keep their funds in a digital wallet or spend it like spending traditional money, people can manage their cryptocurrency balances on exchange platforms.
What are the benefits of cryptocurrency banking?
The main benefit of cryptocurrency banking is that the exchange platform allows consumers to use the digital currency balance like any other currency for daily withdrawals and purchases like cash rather than keeping it as an investment. The cards issued by cryptocurrency exchanges work like prepaid debit cards.
These can be topped up with cryptocurrencies to make purchases online and at merchant stores that do not accept digital currency. Cryptocurrency exchanges generally require the creation of an account and / or digital wallet in order to apply for a cryptocard. Some platforms also require users their identity through the Know Your Customer (KYC) verification process.
