- Blog »
- Decentralized banking system: be your own bank
Decentralized banking system: be your own bank
Written by Davies on / Reading time: 4 minutes.
Have you ever heard about a decentralized economy? Do you know its origin? What role meet the banks in this respect? What do decentralized exchanges provide?
We will give you the answers to these questions.
Do you know the origins of the decentralized banking system?
These are some of the questions that begin to emerge at the same time as the progress in the economy and digitization sectors. Questions that arise from a situation of pointed change, mostly, by the great recession. Uncertainty that is brewing and which takes a turn to the financial system strengthened until then.
There are new alternatives to traditional business models and it seems that something is about to change. new systems of decentralized banking begin to emerge, in a way that, at first, it might have seemed a utopian dream, but it began to take its first steps as reality.
To give shape to what we are telling you, we want to share with you some decentralized baking systems examples. We have compiled some systems that have been emerging throughout the years.
The decentralized Swedish bank, the currency's role in China, or the Bitcoin developed in 2009, with the aim of providing greater security and control in the exchange of goods and services, are examples of decentralized banking.
New ideas in the decentralized economy
The digital transformation, as well as the change in business models, seem to stalk all sectors of society. The financial sector can be a clear proof of this, as we have seen in the last ten years there have been emerging numerous ideas of decentralized economy. In this context, they begin to play an important role in the cryptocurrencies. We are talking about the creation of blockchain-bitcoin as a single body.
You will be wondering, what is blockchain? In general, it refers to a chain of blocks. A database in which you can only write and consult data, but never change it and that all participants have a copy of it, making it a safe and immutable data source. Therefore, it is a technology that makes possible the consensus: "if everyone has that information, that information is true".
This not only demonstrates that ideas can be transformed into a consolidated reality, but it also reflects the evolution of the banking systems. It is possible that, few years from now, confidence deposited in Governments or individuals is going to be invested in numbers and technology. The data show that economy moves towards a more decentralized and more secure system, but how far is the world willing to go?
Innovations and risk-taking can cause some uncertainty, but it is important to know that the first step to grow is to deal with them.
Could we say that Bitcoin has been the basis of a future revolution in the economy?
What does decentralization provide?
Interestingly, decentralized banking is a term arising from at the same time as the term cryptocurrencies. It is no coincidence, as there are people who prefers to describe this process as “cryptobanking”. Decentralization brings the possibility of performing loan services and credit rating without intermediaries, in contrast to the centralized economy.
In this way, we are talking about a process much quicker and more fluidly. To understand what it is, it is necessary to know the language in which it is spoken: blockchain. Thanks to this technology, transparency and the monitoring of transactions have become one of the main contributions of the cryptocurrencies as a decentralization system.
It is possible that we can encounter two disruption keys which are already stalking the world. We talk about cryptocurrencies and blockchains.
Because of these processes, it can be to become your own bank. We are aware that, over the past decade, there have been numerous changes which have served to collaborate and decentralize systems. Why should you adapt to this type of systems? Are they the future of decentralization? Think about it!
A farewell party to the central authority is already brewing in society. Proof of this is the study published by the Banco de España, Decentralized multinational Banks and risk taking: the Spanish experience in the crisis. In it, Isabel Argimon says, “having activity abroad, in countries whose business and financial cycles may be less than perfectly correlated with those of the home country can generate more stability in the results of the consolidated banking group.”
But, above all, decentralization allows you to be your won bank.