Cryptocurrencies in Fintech
The future of cryptocurrencies in the fintech industry is a question many of us would like an answer to. But before jumping to the future, let us first explore cryptocurrencies and their synthesis with fintech.
Cryptocurrencies: What are they?
Cryptocurrencies are digital currencies that are not bound by government regulations or any central authorities. These currencies use Avant Garde technology to function. Stored in blockchains, they are easily transferable and highly secure and can be used for miscellaneous purposes.
The restricted role of government authorities in regulating cryptocurrencies doesn’t make them insecure for use. These currencies function in a decentralized system and are verified using blockchain technologies.
In layman’s language, blockchains are digital records that are majorly used for storing information about cryptocurrencies. These are decentralized ledgers, which exist in a peer-to-peer network and are open for public use.
These ledgers contain every detail of every transaction that has ever been executed pertaining to cryptocurrencies. This public ledger is maintained in a decentralized manner, i.e., it is not governed by any centralized agencies. The level of transparency involved in blockchains ensures incredible security, as every action can be tracked and detected.
Cryptocurrencies in Fintech
The buzz surrounding cryptocurrencies is here to stay. For some, the concept of decentralized currencies is reason enough to splurge, while for others, cryptocurrencies have become an investment taboo.
Being decentralized, these currencies are immensely valued by people residing in countries where the centralized currency is volatile. A good majority of people cave into more stable options like cryptocurrencies that remain unimpeached regardless of their country’s economy.
Apart from people hailing from unstable economies, there are approximately 1 billion people who own and use smartphones but have no traditional bank accounts. Such unbanked individuals create a pool of potential cryptocurrency customers.
Benefits of Cryptocurrencies in Fintech
Efficient Money Transfers
Being set up in a decentralized platform, cryptocurrencies make money transfers easier and more efficient than traditional banks. These currencies can be used to transfer regular or even large sums of money in a matter of seconds. Traditional banking methods or even the process involved in online banking requires feeding in the information or adding beneficiaries, which take some time to get approved. Such cumbersome procedures can be completely avoided in the crypto spectrum.
More Secure Payment Systems
Any payments that are processed using cryptocurrencies are executed through blockchain technologies. This technology records every activity of every crypto coin, making the entire system very secure and safe. The element of transparency exposes all records, leaving no scope for manipulation.
Cryptocurrencies Vs. Fintech
An extremely powerful couple, cryptocurrencies and fintech are both creating a massive disruption in the way we have known and seen our world for many years. Both these elements got conceptualized a few years ago.
Although fintech has witnessed a mass adoption, especially during the pandemic, cryptocurrencies are yet to attain such a level of popularity. Having said this, the valuation of both components conveys a more remarkable story.
In 2021, a cumulative valuation of the top 100 fintech firms revealed a staggering USD 1.82 trillion. Meanwhile, the valuation of the top 100 cryptocurrencies stood at a stupendous USD 2.44 trillion. Having received much lesser acceptance by the masses, the cryptocurrency market has swelled incredibly, soaring higher than the fintech market.
Such unbelievable figures compel us to wonder about the potential cryptocurrencies possess.
The Final Word
A new age technology, cryptocurrencies are gaining momentum quite fervently. According to a report, 94% of financial experts believe that cryptocurrencies have a sparkling future in the financial industry, owing to the leverage of decentralization that they offer. Blockchain technology has not only attracted immense attention from the government but it is also being followed very closely by the banking sector.
Having a secure, open, and quick setup, blockchain technologies offer much better freedom along with safety. It is for these reasons that cryptocurrencies have so deservingly been in the limelight.