Cryptocurrency and traditional banking

The rise of cryptocurrency is reshaping the global financial landscape, posing both challenges and opportunities for traditional banking institutions. Digital currencies like Bitcoin, Ethereum, and stablecoins operate on decentralised blockchain networks, allowing users to conduct transactions without intermediaries such as banks. This shift threatens the traditional banking model, which relies on centralised control over financial transactions.

One of the major impacts of cryptocurrency on banks is the reduction in transaction fees. Cross-border payments, which traditionally take days and involve high costs, can now be completed in minutes using cryptocurrencies. Additionally, decentralised finance (DeFi) platforms offer services like lending and borrowing without requiring a bank account, making financial services more accessible.

However, the volatility of cryptocurrencies, regulatory concerns, and security risks pose significant challenges. Governments worldwide are working on policies to integrate cryptocurrencies into existing financial frameworks while addressing risks like fraud and money laundering.

To stay relevant, traditional banks are exploring blockchain technology and launching their own digital currencies. Instead of resisting change, collaboration between banks and crypto platforms could lead to a more efficient and inclusive financial system. As the digital economy evolves, the coexistence of traditional banking and cryptocurrency seems inevitable.

Nowrin Ahmmed

BBA Department

North South University