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Bank of Thailand adjusts deposit protection limit to 1 million baht, but why crypto people can still smile

Recently, the Deposit Protection Agency has adjusted the deposit protection limit to 1 million baht per 1 depositor per financial institution, which has beenrevealFirst by Mr. Songpol Chivapanyarot Director of the Deposit Protection Agency It will start from 11 August 2021 onwards.

The protection limit of 1 million baht is due to the fact that the Deposit Protection Agency has collected information that there are 82.07 million depositors who received full deposit protection, representing 98.03% of depositors in the entire system. which is considered the majority of the people of the country

The types of deposit accounts that are protected are divided into 5 types, namely current deposits. Savings Deposits, Fixed Deposits, Certificates of Deposit and Deposits

Since the establishment of the Deposit Protection Agency since 2008, we can see that deposit protection for depositors has steadily declined since 2015, with the maximum coverage limit of 25 million baht, up to 5 million baht last year. 2019 until there is only less than 1 million baht at present

The Deposit Protection Agency plays an important role in protecting deposits for both natural and juristic depositors. This includes 18 Thai commercial banks, 12 foreign bank branches, 2 finance companies and 3 credit foncier companies in total. 35 places

Why should you look at other deposit options?

In the past, many people would consider bank deposits to be the best. due to high security anti lost And receive interest every year, but due to the reduction of the current deposit protection limit, it may cause many people to think again.

Since the establishment of the first bank in Thailand in 1904 until now, there have been over 28 banks that have closed or dissolved together with other banks.

Also, due to the COVID-19 situation Currently, more than 250 banks have been shut down since 2020. Now we have to rethink whether banks are still reliable institutions or not. whether in terms of deposits and investments

If anyone is looking at other options such as gold, they may say that it is an interesting alternative. But if you look at the same point of view as depositing money in the bank, then It can also be seen that gold lacks many functions. such as ease of transport, transparency in regards to origin and destination and does not receive annual interest

Picture from goldprice.org

Cryptocurrencies Will Take Over Financial Institutions

Today, hardly anyone is unaware of cryptocurrencies orCryptocurrency with technology behind the scenesBlockchain And what if crypto is more attractive than gold or bank deposits? It would have to be told to the different systems first.

As we all know, cryptocurrencies are decentralized financial systems. Decentralized Finance, unlike banks that are centralized finance and cryptocurrencies, will play an important role in the future.

Is it a good long-term digital deposit?

Picture from envato elements

Over the years, most people have chosen to invest and study cryptocurrencies. But today we are going to offer a digital deposit as an alternative.

Depositing all your coins on different platforms, we call this a Software Wallet, or an online wallet that will hold your coins. Some would call it a Hot Wallet because it is a wallet that can be used for short-term transactions. Well, these wallets are sure to be connected to the internet all the time, making it a long-term security. It may be one of the ways to be stolen online from hackers.

But there is also another type of wallet called Hardware Wallet, which stores coins and private keys that are used to access and verify offline transaction data on a device similar to a flash drive or a thumb. drive This makes long-term deposits more secure. Even if those coins are still in the blockchain. That means we don’t need to trust banks or anyone else to deposit or store our coins. Including no need to worry about deposit protection as well.

Starting with deposits with stable cryptocurrencies such as BTC and ETH, looking at the long-term growth rate over the course of the past 13 years, Bitcoin has seen price growth since 13. USD per 1 BTC in 2012 reached a historic high of over $63,000 per 1 BTC in April, as well as ETH as low as $0.42 per 1 ETH in 2015 reaching its peak. In history at over $4,380 per 1 ETH in May As a percentage, it’s 484,515% and 1,042,757%, respectively. To put it more in perspective, it’s like buying an item for 416 baht 10 years ago and collecting it. Before the item was worth 2,016,000 baht today.

price Bitcoin From 2011 – Present from tradingview
price Ethereum From 2015 – Present from tradingview

But that was a long-term holding for 10 years without a single coin sold. If we look at the volatility only during that year, it may be said that it is a risk that we need to study carefully.

deposit with Stablecoin with higher returns than the bank

If we were to look for crypto that is less volatile and as reliable as the dollar, it would be inevitable. USDT USDC and BUSD, which we will call these cryptocurrencies. Stablecoin And it’s these coins that many consider to be depositing dollars in the bank.

Although all three coins are worth the US dollar. Always, however, they are different, with different certifications and audits.

By the way, USDT is issued by the company. Tether and is certified by Deltec Bank, a law firm. coupled with the lack of account verification causing some investors to see that it is not transparent

While USDC is issued by Circle, it is backed by Coinbase and is endorsed by a number of organizations and financial institutions such as Goldman Sachs or FinCEN and is also audited monthly.

including BUSD developed with cryptocurrency exchange platform Binance approved and regulated by the New York State Department of Financial Services. They are also regularly audited by Withum every month.

Stablecoins can be deposited in exchanges or wallets such as Binance or Coinbase, where they offer an annual percentage return (APY) of 2% to 6% per year. Putting money in a bank that gives you 0.125% to 1% annual interest is 2 to 48 times more.

If the deposit is more than 1 million baht?

Moreover, all financial transactions and wallets are recorded on the blockchain. This allows for peace of mind and less worry about missing money or even forgetting your login password.

However, even these companies cannot guarantee that they will always stand by your side like a bank. And there are no security deposits in the event of a company shutdown or when the Centralized platform is hacked. But keep in mind that in the crypto world, everyone can choose what coin to hold. And can transfer anywhere without having to fill out any complicated documents, it is also very convenient and fast.

Financial that is not the same with strong currents such as Decentralized Finance ( DeFi)

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Today’s technology is almost advancing faster than the world that revolves around itself. Throughout the past period, various technologies have emerged all the time during the past 2-3 years. including financial technology as well

In the past, if we wanted to borrow money, mortgage or even transfer money. We’ll have to go to the bank to do all these things, but if it’s DeFi, you just need a mobile phone or computer with internet access. Therefore, it may be seen that this DeFi will take over banking jobs in the future.

Of course, all financial transactions require mutual trust. The bank has become a reliable intermediary. But nowadays, Smart Contact has been introduced to answer the question, which represents trust from the bank by a reliable intermediary that can always be checked. This also reduces fees and processing delays.

In the past, if we had to borrow a lot of money We may wait months or even years longer. including a lot of money for documents and processing costs If you look back, it may not be worth the time and money that you should not have at all. For this reason, DeFi has to step in to make the systems faster and have lower processing fees compared to banks. Or if you are an investor who wants to pay off the loan, it can be done.

The same is true for bank deposits when we deposit large sums with the bank. Then banks can use that money to lend or borrow at interest rates that are higher than our deposit interest. Therefore, when considering that, we may be at a disadvantage for the bank. But if we put that money into a DeFi-powered Smart Contact system that will be a reliable partner and get full returns without intermediary deductions.

With this we can see that Decentralized Finance is like a physical bank with a technology called blockchain. Including having various functions like a bank which is cheaper and faster

However, one thing DeFi still cannot match with the current banking system is the Collateral system, or collateral for borrowing. In other words, you can use a house or land. and a car to mortgage with the bank to get a loan At the same time, for DeFi this is still a limitation. as it is not supported by law. It also has a decentralized This makes tangible assets difficult to mortgage on DeFi.

Still, to rule this out, DeFi is another attractive source of interest-bearing deposits than banks.

Concerns with DeFi

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DeFi technology is very new today and is very sophisticated and unique. making it difficult for the general public to understand Therefore, it has to go through a lot of study and detailed information. Although the price of DeFi-related coins has risen considerably throughout the past But there are also various thefts such as Rug pull, NFT scams and fake ICOs, etc., which allows detailed studies to minimize potential risks.

Finally, whether investing or depositing money, you have to bear the risk of that money yourself. Including having to study, pay attention, focus and update yourself all the time to be equal to technology that changes over time.

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