Fintech is a relatively new concept, or rather, a relatively new term. It’s the merger of the two words financial technology, and its applications span multiple industries for multiple reasons. Speaking broadly, it helps companies and individuals revolutionize the way they use their money digitally.
It was once nothing more than computer technology applied to backstreet offices. But now, it refers to a broad range of financial applications – including cryptocurrency and other digital currencies – to create new opportunities. The question is, could cryptocurrency survive without fintech companies? It’s an industry that relies heavily on it, so let us explore more.
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The rise of fintech began when the internet and cell phones became so huge. Those two combined created a surge of people opening up their devices, connecting to the internet, and hunting down the products or services they wanted online. When this all started, paying by Visa or credit card would be the only option. Now, we have Google Pay, Apple Pay, PayPal, and Klarna – they're all fintech applications.
Fintech had to become such a big industry because of demand. Over 60% of people now prefer to shop online because it's generally easier to do. We're increasingly moving towards a cashless society, which is why fintech companies are thriving like they are now. Not only are fintech companies helping us to shop online more efficiently, but they're also helping us to understand our finances better.
Think about online banking apps. Before the birth of mobile banking apps, we'd have to go to the bank for a balance update or see what it said at an ATM.
The history of fintech actually dates back to 1886. Society began to build infrastructures that supported globalized financial services – and the first transatlantic cable was installed. The idea of fintech then didn't really evolve until the post-financial crisis in the US, and in 2009 when people were fresh from failing to trust banks – cryptocurrency and blockchains formed.
Cryptocurrency is formed to become decentralized – meaning it's not owned or made by governments and banks. That is because people grew increasingly nervous about the power banks had over their money. A whole new world and language are born, from bear pennant patterns and signals to a crypto wallet – millions of want to be investors have propelled cryptocurrency to the height it is today.
The relationship between fintech and cryptocurrency continually grows – expansions in the cryptocurrency have allowed fintech companies to expand their reach exponentially. From simplified online transactions to custom online wallets built for storing crypto, the applications of fintech are spreading far and wide.
The initial problem with cryptocurrency and any unregulated currency is the lack of policing. In the beginning, there were instances of double-spending, which meant people could spend the same cryptocurrency twice. That's why the introduction of blockchain technology wasn't too far behind cryptocurrency. Blockchain technology serves as a verification process for transactions.
Verification or authorization processes are nothing new. Whenever you complete a transaction online, you'll notice you have to go through an authorization service while the online vendor communicates with your bank to ensure you are who you say you are. That's what blockchain aimed to do. Not only that, but it also added a great fraud prevention security feature for good measure – although crypto fraud is still a prevalent issue.
Blockchain technology came on the market around the same time as Bitcoin did as the market realized there was an authentication problem that was making cryptocurrency a dud currency. It has developed massively since, allowing businesses and individuals alike to trade using the cryptocurrency – but do it securely. Now it's far more developed – blockchain uses spread across multiple industries from healthcare to telecommunications.
The future of fintech and cryptocurrency is going to boom. Cryptocurrency is already more widely accepted than ever before, with there now more apps and online platforms ready for people to sign up to. It's easier than ever to trade cryptocurrency and understand how to do so.
Compared to the other options of trading — like stocks and the impossible to trade forex — cryptocurrency is the people's trading choice. And, with investment and business giants like Elon Musk and Bill Gates backing cryptocurrency and fintech companies, it's likely it won't take long for the industries to develop further.
It's easy to assume that fintech will help cryptocurrency become more valued and usable. Its uses are already expanding quicker than people imagined, with some niche online stores offering it as a payment method. At present, its uses are primarily for trading and investing rather than for using it to make purchases. We can only assume it won't be long until cryptocurrency is another Visa or PayPal – just another online payment method we use.
Fintech companies and cryptocurrencies could not have survived without the other. They have, in a fashion, developed each other. The future expansion of both will lead to a new generation of online shopping fuelled by decentralized currencies and fintech applications.
Updated on May 19, 2022, 1:06 pm
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