There was once a time when we could only dream of the kinds of technologies that we have today. But since its broad inception in the 1990s, financial technology—or fintech, for short—has become a ubiquitous part of our everyday lives. It’s now commonplace to use technology-driven financial solutions for acts as ordinary as settling household bills, paying loan amortizations, and making investments. We now live in a world where financial digital technology is benefiting our business and lifestyle endeavors—and this is why we’ll be seeing more fintech innovations like cryptocurrency very soon.
Mainstream cryptos like Bitcoin (BTC) and Ethereum (ETH), as well as emerging privacy coins like Monero (XMR) kept in a Monero wallet, are truly set to change the landscape of fintech. Here are five things that you need to know about the splash crypto is making, as well as how the use of cryptocurrency could affect your daily life.
The Rise Of Cryptocurrency Has Inspired Greater Innovation In The Fintech World
One thing that’s definitely of note when it comes to cryptocurrency is that it has inspired a new wave of innovation in the fintech sphere. It’s now possible for traders to exchange digital currency in an instant from their crypto wallets, with all their transactions being immutably recorded on a digital ledger. In addition, crypto miners can mint their own coins from either a limited or unlimited supply of tokens.
These developments have encouraged both fintech professionals and their consumers to be excited about what can happen when finance and technology cross over. For sure, it’s likely made you curious about just how quickly today’s fintech can evolve.
Crypto Companies Are Slowly Outpacing Traditional Fintech Companies
Not only are crypto companies growing fast, but they are also occupying top spots in the fintech market. Despite some bearish periods, the top 100 crypto coins have been able to amass a market capitalization of over $2 trillion in the past couple of years—at one point beating out the top 100 fintech companies. In 2022, as many as nine cryptocurrency companies secured a place on Forbes’ exclusive Fintech 50 list.
Crypto companies may have to endure swings between bullish and bearish periods, but soon, they may also be able to go toe to toe with bigger fintech players. That means that if you currently have stakes in crypto, there’s good reason for you to be cautiously optimistic.
Businesses Are Tapping New Global Markets By Accepting Cryptocurrency As Payment
Part of cryptocurrency’s appeal lies in blockchain technology’s ability to facilitate swift but cost-efficient transactions. Large amounts of money can be directly transferred from one crypto wallet to another, all without the additional time or transaction fees traditionally demanded from banks and other intermediaries. That makes it a particularly attractive fintech solution for companies that want to pursue business ventures abroad.
In the near future, crypto transactions may even fare better than credit card transactions done on traditional fintech platforms. Although credit cards are considered familiar payment tools to previous generations of consumers, they are not as well-designed to facilitate internet payments as cryptocurrency platforms are. Forward-thinking businesses may eventually open up their payment options to accommodate crypto and offer more favorable rates to customers who use it—which may be highly advantageous especially if you are holding to earn long term investment returns.
Cryptocurrency Platforms Are Offering Viable New Financial Security Solutions
Though crypto has had its fair share of scandals, scaremongers overlook the fact that more financial crimes involve cash. Moreover, crypto’s initial reputation for being a money laundering tool may soon be a thing of the past. That’s because its base technology actually lends itself quite well to innovations in financial security.
Two key features of the blockchain, or the digital ledger in which crypto transactions are recorded, are its traceability and the unalterable nature of its data. Fintech players may actually turn to blockchain technology to deter fraud and other forms of financial crime, depending on the regulations of their home countries. If crypto is catching fire in your country, this is a development you’ll definitely want to follow.
Cryptocurrency Is Paving The Way For A Decentralized Financial Future
Lastly, cryptocurrency’s most avid proponents say that it will drive society towards a decentralized financial future. Some countries, or even the world at large, may practice decentralized finance (“de-fi”) or finance that’s removed from the control of governing bodies and intermediaries like central banks.
Most experts agree that we’re still leagues away from a future where de-fi is mainstream. But you may soon see the de-fi philosophy in action through mechanisms like smart contracts, or self-executing contracts that automatically facilitate payments on the blockchain when certain conditions have been met. Smart contracts can be completed even without the oversight or mediation of a third party, like a bank. If you’re open-minded towards arrangements like these, be sure to read up more on crypto and decentralized finance.
Cryptocurrency is not a magic bullet for the fintech industry, and it certainly shouldn’t be looked upon as such by people who are interested in trading with it. But there’s no denying the ripple that it’s created in the fintech sphere, as well as the influence it will continue to have. Not to mention, with cryptocurrencies revolutionizing online industries each year.
Whether you consider yourself a casual follower of fintech trends or are quite serious about exploring fintech innovations like crypto, keep your eyes peeled. These are exciting times to watch the industry and to capitalize on its potential.