What Is The Role Of Crypto In Fintech Industry And Economy?

Exploring the role of crypto in the fintech industry and economy

Blockchain technology has grown in popularity and use in modern life over the last few years. However, for those Padawans who envision the Blockchain as a network of nano-bots poised to take over humanity, the Blockchain is essentially just a set of code that records events, with each record being unalterable. These resources could range from storage space to a ledger of peer-to-peer cryptographic transactions that do not require the involvement of a financial institution as a middleman. The Fintech tie, though, is where it starts. Blockchain is a crucial driver of efficiency and effectiveness in the Fintech business, which is largely reliant on computations and analysis.

Because of the tremendous advancement of information technology over the last few decades, our globe today has a powerful IT infrastructure that covers all countries and continents, allowing us to harness high-speed internet to facilitate and improve financial processes.

Though still in its infancy in terms of adoption by centralized financial institutions, the Fintech revolution is raging as customers worldwide increasingly choose Blockchain-powered cryptocurrency transactions to streamline their payment and transaction procedures. Fintech companies can now restrict their focus and focus on their purpose of providing competitive and efficient financial services to their consumers faster and more securely, owing to Blockchain technology and decentralized Cryptocurrencies.

Cryptocurrencies have failed to gain widespread consumer acceptance. However, they are quickly becoming an essential component of the financial ecosystem. Cryptocurrencies appear to be the ideal solution for countries lacking a stable currency (e.g., El Salvador, also known as Bitcoin City). However, given the speculative nature of cryptocurrency, relying too heavily on its value rather than fiat money (a legal tender used by governments) may prove problematic. While numerous countries have banned or restricted the use of cryptocurrencies, broad acceptance of crypto might render traditional banks obsolete and even create a loss of faith in the concerned country's paper currency. Having said that, cryptocurrencies provide significant value to Fintech institutions.

The FinTech business has grown significantly in recent years and is expected to reach $158 million by 2023, with crypto transactions accounting for a considerable portion of this total. Another area where cryptocurrencies can help people gain access to financial and Fintech services is among those who own smartphones but do not have bank accounts. This 'unbanked' category numbers around 1 billion people, providing a massive opportunity for crypto-powered Fintech services to bring out products and services that were previously unavailable to these customers. Because traditional money transfers are plagued by inefficiencies and delays, crypto transactions are a significantly more enticing option. Cryptocurrencies are based on a distributed ledger. They can be moved far more quickly than traditional currencies, which must travel through financial institutions on both sides. The elimination of an intermediary, in this example, middlemen, cuts the cost of such transactions substantially. Convenience, speed, and transparency are critical components of Fintech innovation, and cryptocurrency can provide transactions that meet these criteria.

Fintechs are market disruptors, yet they nonetheless confront difficulties that legacy financial institutions face, such as identity theft, fraud, and money laundering. Dealing with such issues is difficult and requires a significant amount of time and resources. Because cryptocurrencies are designed on decentralized ledgers, it is easier to check transaction records. Blockchain technology is extremely secure. Because Blockchain papers cannot be changed or withdrawn, Fintechs can more easily prevent fraudulent activities. Fintech innovation has emerged as a formidable force in the financial sector. Financial products and services have recently evolved into pro-Fintech solutions, providing customers with various tempting alternatives to traditional banking products and services.