Without a doubt, we have witnessed the increasing centralization of the global financial system since the inception of traditional brick and mortar banks. Everything you can think of such as the issuance of legal tender, interest rate, etc are now regulated and controlled by Central Banks and simultaneously, companies, international organizations, and other government regulatory agencies hold sway at the top of financial affairs.
The Major Flaws in The Current Global Financial System
While centralization might have its advantages, it has however brought about untold difficulties and hardships occasioned by the major flaws present in the current system. The following are the major flaws that can be found in the current global financial systems.
High Rate of Underbanked People
People are required to open bank accounts in order 5o carry out financial transactions and have access to financial services. Nevertheless, a whopping 1.7 billion adults of the world’s total population are reportedly underbanked. Underbanked here means that they have no access to a bank, have no bank account, or have no access to other financial service providers.
Low Rate of World Financial Literacy
To successfully carry out financial transactions or maximize the potentials of financial services or products, there is a need for basic financial literacy to help the people make better and informed decisions. However, only one in ten people have the required financial knowledge to make informed financial decisions.
High Rate of Transactions Fees and Long Transaction Processing Time
To be frank, a lot of people are frustrated from having to pay exorbitant and exploitative transaction charges to banks and other regulatory agencies. To add insult to injury, it typically takes hours, days, and even weeks for some transactions to be processed. This is clearly not the banking system that many envisaged at the turn of the technological era.
Zero Confidence in Government and Banks
Without a doubt, one of the least trusted institutions in the world is the bank. They are closely followed by governments who make obnoxious policies that banks are sometimes compelled to implement, much to the detriment and charging of the people.
Persistent Increase in Global Inequality
Nowadays, financial markets are usually dominated by people who have good connections in a centralized economy. These people include people who have a wide range of financial options and asset classes, people who are financial literates, and people who can put their capital into good use.
On the flip side, a large majority of the world’s population have almost zero financial assets which they can use to build their wealth. A lot of people live from paycheck to paycheck while many more people live below the poverty line and have no access to life-changing assets such as loans, mutual funds, stocks, ETF’s, bonds, etc.
Why Cryptocurrency Has a Promising Future
The major flaws found in the present global financial system has given cryptocurrencies an edge and is the primary reason why the future of cryptocurrencies is promising. Compared to the traditional banking system that operates in a centralized model, cryptocurrencies operate in a decentralized model, thus helping to eliminate most of the flaws found in the current global financial system.
In recent years, cryptocurrency has become a global phenomenon, but there is still a lot to learn about this developing technology. Many fears and concerns surround the technology and its potential to disrupt established banking systems.
Some businesses have adopted crypto as a means of payment; as more businesses accept it, more people will use it, and as new technologies emerge, it will become easier to use. Blockchain is employed not only in cryptocurrencies like Cardano but also in the insurance, financial, and medical industries, and the more widely accepted the technology becomes, the more problems it may solve in our daily lives.
The security of money is an important aspect, and cryptocurrency is extremely secure. Blockchain has never been hacked and is open source, demonstrating its high level of security. The only way cryptocurrencies like Cardano (learn more about Cardano price) can be hacked is if a company in the ecosystem has a vulnerability in their site or has information tied to it that can be used to hack wallets, but cryptocurrency is typically secure and can be used as currency in the future for a long time.
The risks and drawbacks of centralization in the global financial system are well acknowledged, but until today, there has never been a viable alternative.
It may be feasible to create a totally new financial system devoid of the flaws in the current global financial system with cryptocurrencies like Cardano, as Cardano price is on a steady rise.