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As cryptocurrencies become more and more pervasive in our daily lives, traditional banks that do not embrace digital coins risk remaining on the sidelines. The introduction of cryptocurrencies into major banking apps will increase the availability of digital assets and further increase their unprecedented popularity.
It takes millions of years to build a dedicated crypto infrastructure. Companies that provide white label and custom solutions to banks will gain wealth.
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Is there a future in chaos?
Over the past 60 years, nothing has disrupted traditional finance more than the emergence of cryptocurrencies. Digital assets are taking over some of the functions of national central banks, including currency issuance. There is now a whole new crypto economy with blockchain-based services such as lending, insurance, deposits, data analysis, and remittances.
Since the introduction of Bitcoin in 2009, the number of virtual currency users has increased. I grew up User count ranges from 0 to 420 million users. The most significant growth has occurred in the past two to three years, driven by the recent bull market. Moreover, for today’s youth, cryptocurrencies are the perfect manifesto and protest against traditional finance.
But as the crypto winter progresses, one question still remains – is there a future for the crypto market? If so, what will the next growth engine be?
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Why traditional banks are adopting cryptocurrencies and driving their growth
I strongly believe that banks will help fuel the new push for the cryptocurrency market and drive the adoption of digital assets. Here’s why:
- The crypto space is now backgear-free. This is a trillion dollar market with a strong user base that cannot be ignored. Traditional financial institutions and companies demonstrate Interest in digital assets is growing.
- Cryptocurrency has brought with it a myriad of services that can only be used with digital tokens on balances.
- The central banks of 64 countries are Already in testing A digital national currency that brings about a departure from traditional money. Another 66 people are scheduled to depart.
The day when cryptocurrencies become as mainstream as fiat currencies is fast approaching. To keep up with this evolution, banks will implement infrastructure that allows customers to buy, sell, and store digital assets.
Related: Cryptocurrency vs. Banks: Which is the Better Choice?
The number of cryptocurrency users could surge as banks embrace digital assets
I don’t think banks will become anything like crypto exchanges. For regulatory and convenience reasons, the bank only supports the purchase, storage, exchange, and sending of a few major cryptocurrencies.
However, if even a small number of cryptocurrencies were to appear in bulk on banking apps, the number of cryptocurrency users could increase dramatically as access to digital assets is simplified. It’s easier to buy Bitcoin, send it to friends, receive cryptocurrency payments, or withdraw your income from rising prices.
We are already seeing this happening. Deutsche Bank, Raiffeisen Bank and many other big institutions have already obtained crypto licenses. Neobanks (Revolut) and payment platforms (PayPal) have already adopted cryptocurrencies, demonstrating that they are economically viable. And this is just the beginning.
Banks need dedicated infrastructure to enable cryptocurrency functionality
The main difficulty in integrating crypto solutions is that digital asset infrastructure is fundamentally different from traditional banking infrastructure.
- Crypto storage requires a bespoke crypto wallet. It is impossible to store digital coins in a regular bank account.
- Cryptocurrencies are based on different blockchains, each with special technical solutions.
- To enable cryptocurrency swaps, you need to integrate a cryptocurrency exchange API.
- AML standards for cryptocurrencies are very different from those typically followed by banks.
- Cryptocurrency issuance, hedging, charging fees, and other procedures are also different.
While large banks may develop solutions for digital assets, this is a big challenge for smaller and medium-sized banks. The latter lack the money, time, and expertise to build their own infrastructure. It takes millions of dollars and years to build. However, there is a solution.
Sell shovels in the gold rush!
There is a huge niche market opening up for B2B crypto projects, and competition is expected to be intense. Companies offering crypto banking infrastructure through plugins or white labeling will become as popular as traditional banking integrators.
There are probably tens of thousands of partnerships of this type.In the next few years, the cryptocurrency market will grow The number of users will reach 1 billion and the market capitalization will soar to trillions of dollars, especially thanks to the adoption of cryptocurrencies by traditional banks.
Label solutions for cryptocurrency banking generate huge customer flows.
Despite its immense potential, there is still not much competition in this niche market. However, given the already high demand for B2B solutions, banks currently have to wait in line for 4-5 months to obtain crypto infrastructure.
I can say this from experience. His Vault, our crypto banking infrastructure provider, plans to make crypto capabilities available to at least 150 institutions over the next year. It started in 2017 based on. Choose.com We built an ecosystem (formerly Crypterium) to provide a proven infrastructure that has already processed millions of migrations for over 1 million users.
Vault enables financial institutions to incorporate crypto infrastructure 10x faster and 10-15x cheaper than independent development. Customers only pay an onboarding fee and a monthly fee, after which they share the percentage earned from using the ready-made solution.
Cryptocurrency is sweeping the world at an unprecedented speed. In such a situation, banks are left with no choice but to accept new types of assets. And the faster you move towards consolidating your crypto infrastructure, the more likely you are to not only succeed, but even survive in the long run.