Since the invention of Bitcoin and other cryptocurrencies, they have come a long way from being regarded as a fad to being viewed as an investment. Cryptocurrencies, while still stirring debate, have grown increasingly popular as an alternative to fiat money for a reason.
Even though many individuals see crypto as a financial investment, many investors utilize it rather than real money to buy items and services. Given the fact that international transactions are becoming more restricted, cryptocurrencies provide not only an option but also a solution for global payments.
Blockchain technology, in a world where the speed, security, and convenience of financial transactions are essential, appears to have removed all the barriers that traditional banking typically encounters. The concept of borderlessness is the foundation that crypto transactions, as well as other forms of decentralized trade, are built on. Borderlessness implies that anyone anywhere in the world may safely and effectively complete transactions securely and efficiently. This article discusses how the emerging DeFi industry enhances the advantages that crypto brings to financial transactions.
No KYC Verification
KYC stands for Know Your Customer and represents a set of standards providers of financial and investment services must comply with. As the name says, the policy requires a service provider to get to know its customer through the identity verification process. To be clear, identity verification serves to confirm that a person is real and their information is authentic.
The crypto market is not fully regulated and, as such, does not have to employ KYC standards in several situations. So, many peer-to-peer crypto exchange platforms do not require users to verify their identities to purchase digital currencies. In other words, they can obtain Bitcoin and other digital currencies anonymously.
Furthermore, crypto holders can make anonymous international transactions. For instance, if they join one of the Bitcoin bookmakers, they can easily deposit and withdraw their winnings without revealing their identity.
It is one of the best examples of how crypto transactions negate national borders since the lack of regulation enables even bettors in those jurisdictions where online gambling is not regulated to engage in it. As long as they choose trustworthy betting sites, they can rest assured that a safe and fair gaming experience is guaranteed.
Ultrafast and Cost-Effective International Transactions
Cryptocurrencies enable holders to send money to anyone, anywhere in the world. While international transfers in Fiat currencies may take time, crypto transactions are usually processed in a few minutes or even seconds. Provided the sender and receiver have a crypto wallet, they can safely generate unique addresses for each transaction and complete them hassle-free, without the intermediation of any government institution.
With no KYC procedure to follow, most service providers do not impose a pending period, so withdrawals of funds are carried out right away. Moreover, crypto transaction fees are considerably lower than charges regulated banks and payment methods impose for transfers.
In the future, crypto transaction fees could decrease further. The popular Ethereum project has been working on the ETH 2.0 upgrade, which will significantly reduce gas fees and fix the chain speed issues. Moreover, new blockchains such as Solana & Avalanche, or layer-2 scaling solutions like Immutable X for Ethereum and the Lightning Network for Bitcoin promise much higher performance capabilities. Thus, high speeds and low fees.
Crypto Can Never Be Fully Controlled
One of the key characteristics of cryptocurrencies is that most of them are decentralized. With no central authority controlling blockchains architecturally or politically, these systems are more resistant to attacks.
At the same time, blockchain technology can be entirely impartial, preventing certain groups from taking advantage of the system at the expense of others. This is because all crypto transactions are transparent and recorded on a ledger, with everyone on the network validating and getting a copy of them.
However, due to the anonymity cryptocurrencies grant, some countries have introduced limitations to how their citizens can use them. At the moment of writing this article, only two countries in the world, the Central African Republic and El Salvador, have adopted Bitcoin as a legal tender. The list of countries trying to outlaw cryptocurrencies, particularly Bitcoin, is longer.
However, like the Internet, cryptocurrencies may be partially restricted but never fully controlled. Thanks to Decentralized Finance (DeFi), crypto payments can be accessed planetarily. With merely a smartphone and a stable internet connection, one can become the next crypto guru.
DeFi is an emerging financial technology that uses smart contracts. It enables residents of countries like China, where cryptocurrencies are banned, to borrow and lend money, earning interest in the process with no fees imposed by central authorities.
After the government cracked down on cryptocurrencies, more and more crypto enthusiasts in China have turned to DeFi options. Nevertheless, apart from defying China’s crypto ban, the DeFi industry is also expected to expand further, providing financial independence tools and erasing borders between countries.
Are Cryptocurrencies the Best Option for International Transfers?
The reasons why one should invest in crypto assets are various, including many opportunities to make a profit. Some of them are cloud mining, crypto staking, and day trading. However, even those not interested in investment opportunities should consider obtaining digital currencies, as they seem to be the future of money.
Knowing that the world was changing at an incredible pace only a few decades ago, we can say that the future is now. Financial freedom has never been more critical, and innovative concepts of the crypto world can ensure it.
Cryptocurrencies and DeFi tools can enable people to override payment restrictions and make international transfers without disclosing personal details. Furthermore, they can enjoy fast and secure transactions that do not require paying high fees, making crypto a cost-effective option.
Let’s go back to the dawn of Bitcoin as the first digital money. We know it was introduced to address the problems of the traditional, centralized monetary system by giving power to holders. Since 2008, when Bitcoin appeared, the market has seen thousands of new cryptocurrencies. While not all of them have made a good investment opportunity, they all have had the same goal – democratizing the financial world and negating national borders.
To be clear, we are not talking about anarchy or stomping over the world order, only the cancellation of restrictions that make connections between people difficult, tedious, and time-consuming. Admittedly, crypto seems to be the present and the future of international transfers. Why? To sum up our above-discussed aspects in one sentence – because crypto gives the people what they want out of finance.