Conventional Banks Vs Crypto exchanges: the battle for financial trust
The birth of a controversial week creating a huge ripple effect on the conventional banking system was the failure of a Startup funding bank called Silicon Valley bank SVB on the 10th of march 2023, which made customers of the bank to be unable to withdraw funds from their account, this mishap threw the banking sector into despair as people panicked and coincidentally bitcoin gained a whooping 13% in less than 24hrs which many would attribute to the pessimism surrounding the possible collapse in the conventional banking sector as we know it, notwithstanding it has been a battle between both centralized financial institution and the decentralized financial space since the inception of cryptocurrency, in this article, we would be dissecting the world of finance and ways to stay safe in both spaces, without any further ado lets dive in.
BANKS VS CRYPTO EXCHANGES
The crypto space has had its fair share of series of crises from SBF (Sam bank man fried) FTX which crashed due to liquidity issues wiping out billions of dollars in November 2022, to terra Luna collapse that cost the crypto space over 60 billion dollars, all these incidents moved to impede the faith people had in crypto as this exchanges proved that holding your digital assets in an exchange does not guarantee the safety of your money as cryptocurrencies are not insured, be that as it may, cryptocurrencies still holds pretty much a fair advantage when compared to conventional banks.
Banks on the other hand have stood the test of time if we are to overlook the 2008 crash that saw the end of big banks like AmeriBank and co which were attributed to poor management and policies. this occasional collapse of commercial banks could poke holes into the argument of banks being trustworthy and the safest bet when holding your money, needless to say, banks have had more collapses compared to the number of crypto exchanges which have collapsed in the past, we can safely say banks have successfully made it seamless to ignore those collapses because of the Big whale behind them called the Federal reserve which always comes to their rescue at every turn.
BENEFITS OF BANKS
- Banks offer a form of insurance for deposits made below the $250,000 threshold (which means as long as you stay within that range your money is safe in the bank even if the bank fails)
- Banks offer Credits that you can leverage in your business or in purchasing real estate.
- Banks offer reasonable interest rates on loans (majorly depending on the rate of inflation in the country)
BENEFITS OF CRYPTO STORAGE
- You have access to your funds anytime you wish to transact
- The volatility of crypto gives you a level of protection against inflation which affects every dollar saved in the bank.
- Storing your crypto in a cold or hot wallet gives you a sense of security and you don't need a third party to access your funds.
YOUR SAFEST BET
Basically, everyone wants to save their money where they will feel a level of peace knowing that their funds are safe and secure, the choices being the banks or the crypto exchanges, but let's weigh the options that provide a level of insurance to the deposited funds, it would be only wise to hold any amount liquid below $250,000 in an FDIC (Federal Deposit Insurance Corporation) insured bank, that way you know your money is safe, preferably for funds that would be needed in the short term for easy access or you can save in dollar-pegged stablecoins like Tether's USDT, on the other hand in a situation where you wish to save for the long run investing would suffice, in a well-diversified portfolio which cryptocurrency should take a certain percentage which would balance its risk/reward ratio given its highly volatile nature.
Ultimately the war between conventional banks and the crypto world has continually demonstrated the burning need for financial security, which can be achieved by building your income streams and actively or passively investing in various aspects ranging from the financial market to real estate and brick-and-mortar businesses, to guarantee a level of safety to your finances and securing your future as well.