Last year’s data shows that only 5.4% of U.S households did not have a bank account. As the number of unbanked Americans continues to drop, many are wondering how crypto banking plays a role.
Crypto banking is beneficial for those who enjoy investing and plan to use their cryptocurrency for transactions. What many don’t realize is how different this form of banking is when compared to traditional banks.
Read on to learn what you need to know about crypto banking.
Crypto banking differs from traditional banking when it comes to interest rates. These are the factors that lead to interest in crypto banking:
- The currency you use
- How long you tie your money up
- The DeFi application you choose
Before choosing just any company, find out how each one has the ability to offer you rates. In some cases, your money will be lent to other people. Make sure you are comfortable with the lending strategy used.
Alternative currency is often not protected under FDIC insurance like a traditional bank is. If a traditional bank fails, each member is covered for up to $250,000.
For this reason, many cryptocurrency users prefer to use hardware wallets or cold wallets. These devices are offline and allow you to control your digital assets.
The downside to a cold wallet is that you won’t have the ability to earn interest on the money you save.
Theft, Fraud, and Hacking Protection
Buying Bitcoin, or any cryptocurrency for that matter comes with a lot of risks. Your traditional bank most likely covers you from fraud and you often get your money back in return.
In contrast, if your crypto bank gets hacked and money has been moved from the account, it is almost impossible to recover. Crypto accounts don’t offer the same level of safety that a traditional bank would.
Even if you choose to use a Bitcoin ATM, you have a crypto bank backing up your funds. Because crypto comes with a lot of unknowns, it is best to have a great customer service team on your side.
The type of customer service you receive always depends on the company you choose to bank with. For example, if you happen to get locked out of your crypto account, you’ll want to speak with someone on how to recover it.
This page can help answer more of your questions about crypto banking.
More often than not, your traditional American bank account will only store U.S. dollars. Not only will a crypto bank allow you to store different types of cryptocurrencies, but you can keep dollars, euros, pounds, etc.
This is one benefit a traditional bank doesn’t offer as you have more money to earn interest on with a crypto account.
Should You Open a Crypto Banking Account?
Because so many people have traditional bank accounts, it’s easy to take the protection it offers for granted. The most important point to remember from this guide is that opening a crypto banking account is very different.
Although crypto banking has its own advantages, the process isn’t right for everyone. If you believe you can protect your assets with crypto banking, try it out for its various benefits.
For more articles on the world of cryptocurrency and much more, check out the other posts on our blog.