Digital currencies such as Bitcoin and Ethereum are here to stay, and there’s practically nothing that can be done to stop the revolution. Critics, governments, and traditional financial institutions have all tried to slow down the growth of digital currencies without much success. Many individuals and organizations have started warming to the idea of digital currencies as the future of money, a potential first step towards the demise of fiat currencies. It is worthy of note that fiat currency displaced gold and silver as means of payment.

A recent study by Cambridge University estimates the current number of unique cryptocurrency wallets in active use between 2.9 million and 5.8 million. Interestingly, many experts believe that digital currencies will displace fiat money; yet, there’s a strong conviction that such a change is still long on the horizon. Unfortunately, while the traditional financial industry is fixated on the future of money, the market is losing sight of some disruptive changes already underway.

Traditional financial institutions are already waking up to the realities of the massive disruption that digital currencies are facilitating. Now, banks are finding ways to offer cashless alternatives in order to keep their customers from jumping ship to nimbler startups. However, the traditional financial institutions are enmeshed in some legacy traditions, technology, and worldview that rather sabotage their efforts at embracing digital money. This piece looks at four ways digital currencies are already disrupting the global financial industry.

Alternative reserve currencies

People in economically weak countries usually protect their wealth against socioeconomic uncertainties by holding a part of their wealth in the currency of traditionally strong countries such as U.S. Dollars, Euro, and Swiss Franc. In recent times, people have started using cryptocurrency as alternative reserve currencies. Cryptocurrencies, particularly Bitcoin has proven to be financial lifelines for people in Venezuela after the South American’s economy suffered an economic malaise of epic proportions.  

Inflation has jumped almost 130% this year. Whatever the amount of Bolivars that you had at the start of the year, it is worth practically nothing today. Unfortunately, the government is trying to clampdown on the influx of foreign currencies as part of efforts to prop up the Bolivar. However, the digital nature of Bitcoin makes it easy for Venezuelans to find an alternative means of payment that they trust.

Venezuela has already made a strong case for the value proposition of Bitcoin in times of economic uncertainty. Hence, you can expect investors to start hedging their exposure to economic meltdown by buying up digital currencies instead of buying specific currencies that are often tied to the economic fate of a single country.

Facilitation of cross border payments

International money transfers are one of the areas of financial transactions in which banks have the strongest monopoly. Banks use the SWIFT network to move money around globally, but such transfers often command a hefty price tag and they take a couple of days to process. Some online companies offer international money transfer services but the transfers often have to pass through the traditional banking system.

Thankfully, cryptocurrencies are setting the stage to facilitate international money transfer at a relatively cheaper price and with faster processing time than the traditional banking system. Ripple for instance, prides itself as being a frictionless solution for sending money globally by providing connectivity across payment networks for instant, on-demand settlements. Ripple payments are also significantly better than SWIFT transfers because you can trace the funds in real-time while maintaining low operational and liquidity costs.

Efficiency in financial transactions

Cryptocurrencies are opening up the financial services industry in order to make payments more secure, faster, and easier to process at both ends of the transaction. For instance, CryptoPay provides users with an online Bitcoin wallet that you can use to buy, sell, and store cryptocurrencies without worrying about price fluctuations. With a CryptoPay account, you can have your cryptocurrency holdings in EUR, GBP and BTC to provide you with a semblance of stability that is currently lacking in the pricing mechanism of cryptocurrencies.

CryptoPay also provides users with a Bitcoin debit card that serves as a tool for converting your Bitcoin into USD, Pound Sterling and Euro. Hence, while traditional financial institutions are still dragging their feet to provide support for cryptocurrencies, CryptoPay is already looking for ways to make it easier to withdraw your cryptocurrency into fiat currency in order to drive the mass adoption of cryptocurrencies.

Interestingly, CryptoPay is open to investors by the way of an upcoming ICO.  CryptoPay’s ICO for the sale of CPAY tokens provides you with a chance to buy into the bridge between cryptocurrencies and conventional assets. It is worthy of note CryptoPay is a proven tool that has been in operation since 2013, it created its Bitcoin payment gateway in 2014, and it opened its Bitcoin wallet and Bitcoin exchange in 2015.

Full democracy in financial industries

One of the biggest disruptions that cryptocurrencies are currently pushing is the erosion of governments’ control on fiscal and monetary systems. Governments all over the world are guilty of fiscal irresponsibility in which they are mostly printing out money without considering its effect on the purchasing power of their currencies. Digital currencies now provide a decentralized financial system that empowers the people by eliminating the need for intermediary services that banks provide. Digital currencies are also taking the control of monetary supplies out of the hands of the government.

A large part of the blame for the financial crisis that rocked the world in 2008 can be laid on the doorstep of banks because of their irresponsible banking actions. Market watchers believe that bankers are already setting in motion the mechanics that will trigger the next financial crisis. Central bankers are mostly trying to wind down their quantitative easing programs to draw money out of the economy.

Cryptocurrencies on the other hand are designed to run within the confines of the natural laws of demand and supply without the input of self-appointed custodians of monetary policy. The underlying code of any cryptocurrency determines the rules of measuring demand and supply and the blockchain ledger confirms compliance to the rules. In addition, blockchain’s public ledger provides transparency in the markets by being a source of truth that all users respect.