Driven by technological advancements and inherent challenges associated with rudimentary methods of using currency money, merchants have increasingly developed secure and more decentralized forms of currencies that are reliable. As the primary players in the risk management industry involving currencies, banks have also evolved especially in their mode of transactions with more financial institutions such as PSI Pay and other well-established traditional banks opting for digital financial transactions that are more convenient and not burdened by the ethical issues surrounding traditional banking. Moreover, the banks are increasingly introducing new transaction models especially on the backdrop of the 2008 global financial crisis. Aimed at protecting the industry against such crisis, banks have introduced annual fees to encourage financial institutions and investors to put the interests of their clients first.
As the primary risk managers, banks earn from the interest rates they charge private users who borrow unused funds entrusted to them by private individuals. Individuals who deposit funds in banks also benefit from interest rates offered by the banks on the assets and earnings they place in the care of the banks. While currency is divided into three distinct categories including commodity, representative and fiat money, it is the latter that has revolutionized digital banking and financial transactions. Fiat money offers flexibility in when it comes to determining its value. Creators of fiat currencies have the exclusive right to determine the value and legitimacy of the currencies. One modern currency that shares significant characteristics with fiat money is cryptocurrency.
Long reliant upon human interaction, some private equity firms are turning digital to expand investment opportunities.https://t.co/4RIeePCkVh
— PSI-Pay (@PSIPayLtd) November 19, 2018
The Emergence of Alternative Financial Management Models
While cryptocurrencies especially Bitcoins have become buzzwords over the past few years, they are part of a broader drive towards developing alternative models of transactions that are not burdened by the inherent hindrances associated with traditional banking. The other alternative model that has gained traction within the global financial community is crowdfunding. Crowdfunding platforms such as GoFundMe, Patreon, and Kickstarter among others eliminate the need for third-parties such as banks. Transactions can be carried out directly between parties including investment companies. These platforms offer a highly customized model for financial transactions and give individuals greater liberty when it comes to decision making.
Cryptocurrencies offer similar liberties and are highly decentralized. Unlike traditional currencies, the transaction ledger is spread across various computers making them difficult to control by any institution or government. Moreover, decentralization ensures that cryptocurrencies are secure especially when it comes to hacking and network connectivity problems. However, the open-source nature of cryptocurrencies makes them vulnerable to value manipulation, especially by creators. They are also highly volatile. Despite these challenges, banks and financial institutions such as PSI Pay are increasingly incorporating cryptocurrencies in their digital financial transaction platforms.