Traditional financial system is controlled by the governments which owns the Central banks. These central banks print currency notes. Money channelize through the central banks to the commercial and other scheduled banks, and from there it reaches to the common man.
Apart from printing and circulating currency, Central banks also control the flow of the money. Central banks control the flow of money by changing interest rates. When they increase the rate of interest, money is siphoned from the open market and when the rate of interest lowers, total liquidity in the markets increases. These central banks and other financial institutions earn profit by lending money on credit and also by deducting various service charges from the customers for using their services. When you transfer money, use your credit cards, debit cards etc. for payment banks earn profit.
Hence, cryptocurrencies are changing the world financial environment. They are decentralized, that means nobody controls them. Their transactions are very fast and takes only a few seconds or minutes. Also, money transfer is much cheaper in comparison to the traditional financial system. Cryptocurrency transactions maintain anonymity and privacy. Hence, due to these virtues cryptocurrencies are taking away business from the traditional banking system. That is why traditional financial system is facing a big threat from the crypto trade. Cryptocurrencies can even become substitute of fiats.
However, cryptocurrencies transactions are irreversible i.e. you cannot cancel transaction once you have authorized a payment. All cryptocurrency transactions are recorded permanently in a immutable ledger of blockchain. Crypto transactions have huge advantages like protection of identity, fast transaction speed, low cost of money transfer, easier steps to perform transactions, no need to carry various types of cards and currency notes, secure and safe transactions etc. These are the advantages of cryptocurrencies over the traditional financial system.
