«Traditional Finances» or «Trad-Fi» is one more term people had to come up with to separate banking-brokerage-stocks from DeFi stuff. The general leitmotif of crypto is that the banking system is outdated, old, corrupt, inefficient and has to go.
The crypto market is big, but not as big as the New York Stock Exchange (NYSE). Total capitalization of crypto — the amount of money in the system — is around 2 to 2,4 Trillion US Dollars: exactly as much you’d need to build The Line in Dubai or Neom City next to it. That’s 1\10 of total NYSE capitalization, which is around 28 Trillion dollars. Daily vol to daily vol compared, however, Crypto exceeds NYSE and NASDAQ combined — $120B vs $70B. In a sense, Crypto is smaller than traditional stock markets, but faster — outpacing even the most rapid indexes.
Crypto and Traditional Fiances are intertwined: from one side you have self-custody and programmable money, from the other — an old system to store and transmit value people are using because their parents and grandparents did so. Both intersect when you want to buy a crypto for investment.
Compared to Trad-Fi Crypto has its nuances, for some they’re a plus, for some — a minus:
- Crypto is faster and costs less to operate. In Trad-Fi you have fees deducted from fees, dozens of hidden payments and obscure calculations for bank deposits which can be settled anywhere from 24 hours to a week. Major selling points in crypto are «low fees» and «instant transfers» — projects that go against this paradigm without providing more value to the user die out in less than a year after start. Basically, every chain’s goal is to reduce fees, so more people are willing to use them. For instance, LTC takes as low as 0.0000001 of the token to cover transaction costs and ETH moved on from PoW to PoS to get rid of gas price spikes.
- Self-Custody also means you are your own tech support. There’s no undoing a mistakenly sent transaction, you can’t refund money after being sigscammed and nobody is going to insure your BTC (so far). From the other side — nobody can open your bank account and suddenly decide to terminate it or restrict your access to funds because somebody doesn't like you.
- Blockchains behind crypto can do more than regular banks. You can actually program every part of the bank in a blockchain — that’s how you get a crypto wallet, lending & borrow protocols, liquidity pools, crypto swappers, DEX trading platforms and MEV bots. Aside from that, blockchains can do useful everyday stuff, like help with supply chains, keep immutable records of politician’s actions or count votes so they can’t be fabricated during elections.
Is crypto better than a bank or stock trading account? Depends on your use case: if you want to travel freely and pay without borders — yes. If you want to do that and safeguard from dirty crypto, like in Kolo — crypto offers some of the best tools. Want to get exposed to one of the most volatile markets out there? The stock market tends to be dormant for years before new players change that and take a cut of profit previously wasn’t being considered by others. In crypto things happen much faster — thousands of independent geeks are lurking in chain data every day in search of how to extract profit with code out of thinnest market layers.
Crypto is virtual, stocks are not.
- Imagine a certain country goes to war with another, and now their economic relations are busted for a few business decades to centuries? Now, every asset in your portfolio tied to the attacking party then would become wiped out of the market with a devastating bear run. The assets tied to the attacked party will be under risk too, but it’ll be more feasible than total erasure. In case when your government is endangered — whether from outside or within — your savings would be in danger too.
- Crypto? It’s volatile, but the assets behind it — dApps, DEX’es, Swap Platforms and others — are distributed in the network built to be truly global and decentralized. If one node fails — thousands will take its place, if the government fails — you have little choice. But if a hack happens, you’re still better off to keep something like precious metals around.
- How risky is crypto? There's a lot of standpoints on that, but [here’s a useful risk comparison ranktable for you].
Crypto simply has more venture projects than a stock market. Bank accounts and stock markets still have better legal support — you can sue the company behind a share or launch a lawsuit against shareholders.
From the standpoint of taking a mortgage, college credit, lending money for a business or getting insured — you’re still better off with a banking system. However, in 2024 you have platforms that allow you to get a loan by using crypto as collateral — lending protocols power websites which do that, but you’ll have to complete a few KYC’s to get through.
If you want Real Free Trade, where Wall Street guys aren’t choking down your ability to invest — Crypto has some of the best arrangements of hi-tech venture projects to choose from at the moment of their birth to the market.
Your crypto wallet, albeit powerful, is still a novelty tool to the global world. Despite being cutting-edge financial tech, not all wallets can buy you a ticket at the Airport via Google or Apple Pay. «Not all» because Kolo wallets do allow it — with a Kolo Card you can pay for everything in crypto and your every transaction is protected by the law. Go check it out: kolo.in
