Some Reasons Why Crypto Users Prefer Cryptocurrency Exchanges Over Commercial Banks
The reasons are not far-fetched. Some of them include:
Let's try to see each of these reasons in detail to understand why many crypto users prefer cryptocurrency exchanges over banks.
Comfort
Cryptocurrency exchanges offer their users many options which can be executed from the comfort of their homes. Users can convert their assets to over 19, 000 cryptocurrencies that are present in the market. However, in the banking system, a customer needs to have a domiciliary account that has a given fiat currency for such transactions to be allowed. This makes crypto users prefer dealing with cryptocurrency exchanges over commercial banks.
Anonymous Nature
The decentralized nature of cryptocurrencies that are enabled on the blockchain makes a user's cryptocurrency holdings remain anonymous. Most cryptocurrency exchanges allow their users to create accounts without any need of getting verified. Moreover, cryptocurrency users that hodl in their private wallets do not need any verification to handle transactions. No one knows who is responsible for a given transaction. Users can also use pseudo names for their wallet addresses.
However, commercial banks have the authority to have access to someone's account, and the identity of an account holder is always known. Some individuals prefer to be independent and remain anonymous, so they prefer to deal with cryptocurrency exchanges over commercial banks.
Possibility of Getting Huge Returns
One of the reasons why some countries and banks are against cryptocurrency is its high volatility. Irrespective of this opposition, some crypto users prefer to hodl their money on cryptocurrency exchanges than keep it in commercial banks. This volatility could give huge returns on investment in a such duration. There might not be any bank package presently that has given the kind of returns that Bitcoin has given in less than 9 years. Within the past 9 years, the return on investment on Bitcoin is 46,334%. This means that a Bitcoin hodler has received $463.34 for each $1 investment in the past 9 years.
According to Gobankingrates.com, the highest global interest on a savings account is 37.64% per annum. This means, that in 9 years, an account holder would earn 1772% interest on their deposit. This represents a $17.72 profit on each $1 saving account holding. This means that a Bitcoin holder has earned more than 25 times what the use would have received as a maximum interest on their deposit in the past 9 years.
Low Transaction Fees
Sending money across the world has been made very easy by cryptocurrency. The huge and numerous debits that are charged by commercial banks have discouraged some bank account holders from attempting to do so. This ought not to be so. Recently, it was seen that someone was charged only $0.12 to execute a $300 million worth of Bitcoin (BTC) transaction. If this was done through a commercial bank, they might have paid over $10000 for it to be completed for banks with lesser charges.
Void of Government Control
Some crypto users prefer cryptocurrency exchanges over commercial banks due to the option of escaping from government sanctions. Some governments, especially in the developing nations, could sanction the account of a political opponent in a bid to limit their financial capacity. This is commonly seen during election time. However, with cryptocurrency exchanges, such sanctions cannot be implemented since they are not in control of the funds of crypto users. This makes crypto users prefer storing their assets with cryptocurrency exchanges over commercial banks.
No Bureaucracy
For some huge transactions to be done, a commercial bank customer might be required to do a lot of paperwork, asked to visit some officials, and then wait for days before permission is given from the headquarters. At other times, after waiting for all this while, the customer might be told that the bank has no capacity to execute the transaction. This has cost some account holdings profitable opportunities since they could not meet up with the deadlines for transactions to be done.
However, with cryptocurrencies, a crypto user can easily transfer any amount they wish from their account to a receiver, which is confirmed on the blockchain in a matter of seconds.
Larger Coverage
Prior to the evolution of cryptocurrencies, the SWIFT system helped businesses. However, cryptocurrencies have enabled its users to have access to even the unbanked people in the world. The likes of Stellar Lumens (XLM) and Ripple's native token (XRP) were created to meet the needs of such users.
Conclusion
Irrespective of the risks that are involved with cryptocurrencies, most crypto users still prefer to deal with cryptocurrency exchanges than commercial banks. With the factors above, we can deduce that more crypto users will continue to prefer to store their tokens with cryptocurrency exchanges than with commercial banks as crypto adoption increases in the future.