- Monopoly of Monetary Policies
Centralised Banking: The central bank of a country is the only body assigned to making the rules that guide the economy in the state. It is a strict body that can almost not be questioned because of the veto power given to it by law. The commercial banks in turn use these policies to control customers’ monies and give certain rules to work in accordance to the central bank’s regulations and policies.
Cryptocurrency: Cryptocurrency on the other hand has no parent body control. Only cryptography miners can give directives on how the block chain works but no veto power is accorded to a miner in the world of cryptocurrency. Anyone can mine cryptocurrency if they can do the work of solving cryptographic puzzles.
Verdict: Centralised banking seems to not have a hang on fraud or third-party hack and manipulation and still has strict rules over the commercial banks and customers. But the flexible and more secured way transaction can be done without all the rules make it friendly and appealing because it absorbs customers into the system.
- Third-Party Involvement
Centralised Banking: The centralised banking or most payment networks adopts the third party to service customers. Banks employ the services of third parties like, network servers to for banking operations, Quickteller, Visa and the likes. This method is considered vulnerable because it is not free of fraud or manipulation or even collapse. These third-parties also over-charge customers for rendered services e.g. ATM card charges, minimum account balance charge and ATM card acquisitions – all these because third parties are employed.
Cryptocurrency: Cryptocurrencies exist mainly because they are able to boycott the third party system. The blockchain makes transactions safe and secure by involving the customers to run their transactions without the involvement of any other party involved. All that is required is a private key by the sender to make transactions which is revealed in a public wallet (more like a public ledger book) and to avoid fraud or hack, only the miner can confirm a transaction with the go ahead of a sender which can only be done with the private key.
Verdict: Cryptocurrency transactions appear to be faster, cheaper, safer and simpler compared to the centralised banking system.
- Generating Currency
Centralised Banking: Only the central bank can mint currencies. No other bank is given that responsibility. Every other bank waits on the central bank for currencies before they can circulate it in the state or even transact with it.
Cryptocurrency: Anyone can be a miner as long as they can solve cryptographic puzzles which can be solved in various ways. Miners started with the use of a computer to powerful computer hardware and now to industrial-grade mining ware. The more the miners, the more difficult it is to mine and the lesser the value of the currency, but the more expensive it is to buy.
Verdict: There is no room for competition in the centralised system which does not allow inclusive growth. But for cryptocurrency, everyone involved in cryptocurrency can mine if they get a hang of how to solve cryptography or do the business of buying, storing or exchanging cryptocurrencies with flat currencies. Everyone can make a fortune out of cryptocurrency in a nutshell.
- Government Control
Centralised Banking: Government can interfere with centralised banking in some ways because it is founded on the laws of the state and because of the third party inclusion which needs to be guided by certain acts and regulations for transparency in transaction and with banks.
Cryptocurrency: It is still very hard for government to be involved with cryptocurrency because of the lack of third party involvement in it and also because the currencies are digitally created and are widely accepted by many. Its level of independence makes some countries stop cryptocurrency because it cannot be penetrated and gives no need for rules. But some countries have found a way to set guides in place for cryptocurrency so as to fit it into their economic system and flow.
Verdict: Cryptocurrency again shows the new age currency transaction that can be achieved without interference that needs no regulations because it has covered up for it in security from third party influences.
- Currency Value
Centralised Banking: Certain factors can affect the currency value. These may include profits and losses of the government, inflation, wrong policies and the country’s debts. And due to its lack of accommodation for inclusive growth, money tends to be in the hands of the high and mighty in the society making it less accessible to average citizens for use.
Cryptocurrency: With cryptocurrency, only and major effects of currency value is the problem each miner solves for customers which allows the flow of such cryptocurrency in the market. The more the miners for a certain cryptocurrency, the lesser the value and the more difficult it is to mine and therefore, the more expensive the cryptocurrencies become. But because there is room to break grounds in cryptography, the competition keeps the market going. Also, it can be hacked, but this act is hardly achieved.
Verdict: The uncertainty of government’s returns, which can come back to affect the flow of currency as well as its value, is a major concern when it comes to centralised banking. But cryptocurrencies’ transparency and security weighs ahead the sway of value because the competition to make it better pays the price of fluctuation in currency value.
- Usage
Centralised Banking: Everyone has to use the currency infused by the central bank because only they have the right to mint money. Therefore, the currency by central banking is widely accepted as a means of exchange or transaction.
Cryptocurrency: There are lots of cryptocurrencies in the market because there is no miner with the autonomous power to be the only one to generate cryptocurrency. So, there are a number of them out there but they all do not have the same level of acceptance. The first cryptocurrency generated is Bitcoin and this cryptocurrency is widely accepted than others because it is trusted by many after it has stood the test of time and a lot of people made their fortune from it.
Few years from now, the world will deal solely with cryptocurrency because of the problem it solves in the economy and people will have no other choice than to transact with it, especially business owners.
Verdict: The world and its adoption of new phenomenal will definitely take into cryptocurrency so much that it will be spent on the street and anywhere just like the flat currencies we know. Because the world pushes into the cashless world daily and as long as that is happening, Cryptocurrency will thrive above flat currencies in no time.
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