How Banks Work

Modus operandi of banks is completely different as they deal only in centralized currency. Since the origination of cryptocurrency, banks have started facing a new competitor. It is not just
about the competition but mode of operation and trustworthiness. Most of the people have faith in conventional banking methods and centralized currency. It can be said that trust of people is the most significant thing that makes a bank functioning. We usually provide our money to banks so that they may keep it safe.

What is the earning source of banks?

They gain money by the money you provide them and they provide you a part of such return that is commonly known as interest. For instance, they take money from your account and plenty of other accounts in their bank and they utilize all such money for buying Treasury note that is guaranteed by the central government and provides returns of 5%.

Along with that banks also lend your money to other people. For instance a person visits a bank for a car loan and bank offers loan to such person at 7% pa, then the bank take money from your account and gives it to borrower. When the borrower pays the loan with interest then bank send some percentage to your account as interest and keeps rest with it.

There may be different types of banks accounts as per requirements like Savings Account, Current Account etc. Banks also earn handsome amount of money as an Interchange Fee. It is a fee that merchants pay to the bank issued the card. For Debit cards, interchange fee is 1.1% and 1.7% for the credit cards.
Cryptocurrency is completely different from centralized currency. Though, it needs to gain trust of more and more people. Banks are also doing their work precisely but cryptocurrency is also making a mark.

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