Cryptocurrency is a digital asset that uses encryption to control the creation and transfer of money within a digital network. A cryptocurrency wallet is an account where cryptocurrencies can get securely stored.
The market speculation led many to buy cryptocurrency at soaring prices over the last few years. The new additions allow users to buy crypto with a credit card or convert cryptocurrency (fiat) to US dollars and transfer it back.
You can purchase cryptocurrency and have a bank facilitate the process. When you transfer bitcoins into your bank account or exchange them for fiat money at an exchange, you are doing one of two things:
- Converting crypto into regular money
- Removing crypto from your wallet into a bank account (or onto an exchange site if you do not have money in your wallet yet).
Do Banks See Crypto as a Threat or an Opportunity?
Banks can handle cryptocurrencies, but they need to be careful. Banks are more than just financial institutions that lend money, though. They also handle several things we take for granted in our day-to-day lives, like payments and savings.
Banks ultimately get used as a means to save and obtain loans. If anything were to happen, either because of fraud or something else, we can all suffer greatly.
It is probably for the best that banks are not too afraid of cryptocurrencies because it will make them less able to offer their services to the general population. If a bank can not provide certain services, people can always choose another alternative and move on without anyone noticing (and neither would two parties be held accountable).
Why do Banks Favour Cryptocurrencies?
Cryptocurrencies have been around for a while, but the general public has not fully caught them.
Cryptocurrencies are digital currencies like Bitcoin and Ethereum that allow investors to send value from one person to another via a secure network. These transactions get processed quickly and securely, making them an attractive payment method for online business transactions. While some cryptocurrencies can be vulnerable to hacking or fraud, their security is continually improving.
An added benefit of cryptocurrencies is that they offer businesses the ability to offer new payment methods for their customers. Banks in South Korea have gotten on board with this trend and offer accounts dedicated to cryptocurrency trading. If this catches on in other countries, it can lead to even more widespread adoption of these digital currencies.
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How are Banks Helping Users to Buy Cryptos?
I am happy to report that more and more banks are making it easier for you to buy Bitcoin and other cryptocurrencies in the US and Europe, whether or not you have a bank account. Following are a few ways where banks are helping their customers buy crypto:
First, some banks offer accounts that allow you to purchase cryptocurrency with your credit card or PayPal. There are no monthly fees because they do not charge interchange fees on top of the purchase price. You need to open an account before you can use this service. The good thing about these is that if the price of Bitcoin goes down, there is no way in hell your bank will freeze your account or send it back to them (as happens with credit cards).
Second, some banks let you deposit fiat into their accounts, and in return, you can purchase crypto with fiat instead of credit card/PayPal later on. There may be limits on how much money you can deposit initially. However, if the price goes up when it is time for withdrawal, the bank will let you withdraw your crypto from them at any time without paying additional fees.
Third, some banks let their users buy cryptocurrency directly through a specific exchange without paying additional fees. Not all exchanges charge transaction fees. You will know which exchanges offer this service if they show up under “Buy/Sell” under “Exchange,” usually within each market’s list of options in the platform’s settings.
What Does Crypto Purchasing Look like for a Bank Customer?
A bank was all about keeping your customers happy for a long time. These days, it is more of an arms race to offer services that set you apart from the competition. One area banks are trying to hit home runs with is cryptocurrency. Because Bitcoin and Ethereum have been getting so much attention lately, more retail banks are eager to get in on the action and make cryptocurrency purchasing possible for their customers.
It can be a huge opportunity for banks looking to shake up their image and expand their clientele beyond those who own homes or have high-interest savings accounts. Both these groups do not have many young people. It can also bring some new business into the banking sector. These can be people who never had much interest in saving money but always wanted to dabble in crypto as a hobby.