Traditional Banks Continue Raking in Profits Despite Down-Market and DeFi Popularity

The cryptocurrency industry has matured, but banks not as much. With an increased number of decentralized digital currencies and FinTech startups taking center stage in the financial sector, traditional bank profits are holding steady.Bankers have been quick to point out that they provide a service which is necessary for people’s day-to-day lives while blockchain companies like Bitcoin don’t do anything new or different from what was already available before crypto came around.,

The “defi regulation” is a term that is used to describe the process of creating decentralized financial applications. The popularity of these apps has been on the decline, but traditional banks continue to rake in profits.

Traditional Banks Continue Raking in Profits Despite Down-Market and DeFi Popularity

 

Digital assets have grown in popularity in recent years. Yes, the market is in the middle of its most recent negative cycle, but a wider view reveals a slew of positive factors. Bitcoin, in particular, has received formal recognition.

  • Institutional investors and service providers were attracted.
  • As a store of value / hedging asset, it has showed potential (adopted in many treasury reserves)
  • demonstrated evidence of being used as a medium of exchange (Lightning Network growth and adoption)
  • countries have adopted (El Salvador, Central African Republic)

Aside from Bitcoin, the industry has witnessed the emergence of totally new subgroups. Namely,

  • Finance that is not centralized (DeFi)
  • Securities in the Digital Age
  • Tokens that aren’t fungible (NFTs)

The list goes on and on, and it’s easy to become enthusiastic about what’s to come in the next several years when looking at these accomplishments (along with previous market highs), neglecting our continuous need for and dependence on conventional finance. If you’re searching for a reality check and a way to moderate your expectations, look no further than the current market downturn.

Last week, each of Canada’s big banks presented their quarterly profit reports, demonstrating that, despite how far digital assets have gone, they still have a long way to go before we can be free of our dependency on conventional finance.

Banks in Canada are outperforming expectations.

As it is, most of the globe is now suffering excessive inflation, and Canada is no exception. Despite operating in what seem to be challenging circumstances, large banks throughout the country continue to report higher-than-expected results.

As Canada’s top banks presented their second-quarter financial results this week, one after the other, each one reported higher-than-expected profits, resulting in generally dividend increases.

Essentially, conventional banking is as profitable and resilient as ever at a time when inflation is out of control, property markets are at new highs, and gasoline costs are at all-time highs.

Is it Possible for Digital Assets to Compete?

The following areas were identified as having contributed to the large banks’ better-than-expected performance.

  • Commercial and Retail Lending
  • Management of one’s wealth
  • Insurance
  • Fees

Intriguingly, each of the factors listed above for the success of Canada’s main banks is an area where digital assets have the potential to disrupt.

Lending services are already commonplace in both a centralized and decentralized fashion, while Decentralized Autonomous Organizations (DAOs) have the ability to supplant traditional Management of one’s wealth and Insurance services.  Fees on the other hand can be greatly diminished through assets like Bitcoin on the Lightning Network.

This possibility to one day overtake, or at the very least match in terms of general acceptance, the large banks’ bread-and-butter services hints to a bright future.

The Remainder

As of now, it’s estimated that over 300 million individuals throughout the globe used digital assets at the start of the year — a drop in the bucket. All of this emphasizes not just how far innovative technologies like DeFi (which permit loans, interest-bearing accounts, value transfers, and so on) have to go, but also how much potential remains untapped.

There will be more DeFi hacks, UST-style failures, and bear markets along the road, and although digital assets are still years away from completely replacing conventional services, progress is being made. The Lightning Network will eventually become mainstream, regulatory uncertainty will be obsolete, and our dependence on large banks will be obsolete.

The “how to select altcoins” is a blog post from the future. In it, we learn that traditional banks are still raking in profits despite the down-market and crypto popularity.

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