For a long time, banks have been at the heart of how we store and manage our finances. However, unpredictable incidents like the collapse of Silicon Valley Bank bring into question the reliability of custodial banking and open the door to new financial solutions.
The Risks of Custodial Banking
Custodial banking involves handing control of your money to a bank, which presents several risks. An example is account freezes without warning, as experienced by thousands of Silicon Valley Bank customers. These incidents are shocking reminders of the need to rethink current systems. Moreover, data leaks are common among banks, making them targets of cyber attacks.
What Is Non-Custodial Banking
Non-custodial banking provides a solution: full control over one's finances without intermediaries. In the age of blockchain and decentralized finance, users are empowered to store their assets in digital wallets, eliminating risks of data breaches and unauthorized transactions.
The Rise of Deobanks: A Self-Sovereign Alternative
With technologies like WeFi emerging, the services market is evolving. These 'Deobanks' enable users to manage their finances transparently on blockchain terms, bypassing bank intervention. This is particularly beneficial for overseas workers sending money abroad without high fees.
Non-custodial banking and DeFi technologies are not just passing trends but steps toward a new approach to finance management. They offer opportunities previously untapped in traditional banking settings.
