One of the things that make cryptocurrencies so appealing is that it can offer an alternative to standard banking transactions.
Blockchain technology allows transfer of funds minus the third party to confirm the transaction. A German businessman Radoslav Albrecht founded Bitbond, an online bank that makes use of Bitcoin in order to facilitate payments internationally. He mentioned that “Traditional money transfers are relatively costly due to currency exchange fees, and can take up to a few days”. He added that “With Bitbond, payments work independently of where customers are. Via internet is very, very quick and the fees are low”.
Solution to Volatility?
One of the main problems that people have to deal with is the volatility of cryptocurrencies. Cryptocurrency price swings can be drastic. Just to give you an idea, Bitcoin selling for almost $20,000 in December is now just selling below $9,000. For this reason, Bitbond found a good solution to this problem.
Clients of Bitbond will hold on the cryptos for a few minutes before getting exchanged for local currency. And in this manner, it helps the clients to not deal with the volatile nature of the cryptocurrency market.
Bitbond was founded in 2013 and is now an officially licensed bank and has a number of investors. Bitbond’s office located in Berlin now employs 24 people from different countries. In addition to this, the online bank is already managing loans for about 100 clients. And just how big are the loans that they are giving out? In total, the loans are at around $1 million each month.
Majority of customers are small business owners or freelance workers that need an alternative to the expensive bank loan. Compared to the standards of most banks, the loans are quite small. It is as high as around $50,000.
Bitcoin Adoption in Germany
What makes it revolutionary is that this is the first time that Bitcoin has been used in order to facilitate loans. Germany is quite open when it comes to the use of Bitcoin. In fact, adoption of Bitcoin is quite growing. In terms of Bitcoin usage, Germany ranks second to the US.
Which Cryptocurrency To Use?
Bitcoin isn’t the only cryptocurrency around. There are more than 1,000 cryptocurrencies today. Top altcoins are also offering things that Bitcoin couldn’t provide such as cheaper transaction fees and faster processing of transactions.
For instance, $99 million-worth of LTC was transferred with just a $0.40 transaction fee. And the transaction itself just took place in less than 3 minutes.
Ripple is another cryptocurrency that is starting to gain attention because of their focus on cross-border transactions. Ripple is the third-most valuable cryptocurrency today. Its efforts are something that is worth looking into considering that it showed 40% to 70% reduction of cost for cross-border payments. It also has an average time of payment time of around 2 minutes.
Will there be more online banks that will make use of cryptocurrencies in the near future? This can be a trend considering the fact that cryptocurrencies are cheaper than banking transactions.