How Fintech Is Changing The Shape Of The Market
Technology has greatly changed the world as we know it. Think about it, 25 years ago, if you wanted to send a letter to a friend in another state, the best way to go about it was to do so using snail mail. Today, we can send messages through various online vehicles that will be received in the blink of an eye! Not to mention, technology has led to great advancements in medical innovation, environmental protection, and even how we are entertained.
However, one area where we're seeing one of the biggest technology-related evolutions is the finance industry. In fact, technology is leading to such changes in the world of finance that there's now a new term used widely to explain what's happening. FinTech means an expanding relationship between technology and finance, or describing the industry in which technology and finance companies align.
An Evolution Taking Place As We Speak
As technology continues to lead to the evolution of various industries, one industry in which we are seeing what could be the most rapid evolution, is the finance industry. Like most changes we've seen to the way we live, the evolution started slowly, and is largely the result of access to the internet. Here are just a few of the abilities consumers have in the world of finance thanks to the FinTech evolution:
Online Banking - Without technology that not only allows banks to deliver information via an online connection, but do it securely, we wouldn't be able to log into our bank accounts on our phones or computers. That would bring us back to the dark ages of checking accounts, when paper and pen were needed everywhere you went!
Investing/Trading - In the past, investing was a thing that only the professionals really had access to. Sure, you could invest, but to do so, you'd need to talk to a banker who would take a pretty decent commission on transactions. Today, anyone can make investments. In fact, there are many people that make their living day trading online or that manage their own investment portfolios to avoid the large cost associated with doing it the old fashioned way.
Budget Management - When managing a budget in the past, there was a lot of work that needed to be done to figure out what worked for you. However, these days, there are tons of apps and tools online that make budgeting a relatively simple process. Going further, many of these tools will provide details on where you are spending your money and tips on how you could save more!
Enter The World Of Cryptocurrency
Cryptocurrency is a topic that's all over the place right now, and for good reason. Last year, the values of cryptocurrencies soared in multiples. That's right, we're not talking percentages, but hundreds and in many cases thousands of percents. While some argue that cryptocurrency is not likely to be a permanent addition to the financial system as we know it, others believe that it is here to stay. Nonetheless, it represents the largest evolution in the FinTech space and could become a cornerstone in the financial system of tomorrow.
Cryptocurrency is a currency that is unlike any other currency on the planet. You see, currency as we know it, or fiat currency, is centralized. There are central banks around the world that make monetary policy decisions in an attempt to stabilize the growth of the currency they represent.
However, cryptocurrency aims to decentralize the currency system. Instead of a central bank having control over monetary policy, cryptocurrency runs on what's known as the blockchain. A Blockchain is technology that acts as a transparent ledger, running on a series of if this, then that propositions. The ledger aims to make cryptocurrency impossible to counterfeit, easy to track, and more secure than any other currency on the planet.
This FinTech Milestone Is Changing The Shape Of The Market
Cryptocurrency is a major milestone in the FinTech space. However, it's not only changing how some consumers buy things, it's actually changing how companies go about raising funds. In the past, if a corporation wanted to raise funds from the public, they had to go through bankers in a very regulated process known as the IPO or initial public offering. However, ICOs, or initial coin offerings are becoming more and more popular.
An ICO is an offering that works just like a public offering. However, instead of purchasing shares based on the value the investor sees in the stock, altcoins, or cryptocurrency is purchased based on the value the investor sees in the underlying tech company and what its cryptocurrency represents. In fact, the ICO process has minted several millionaires over recent years.
What The Future Holds
The truth is that no one can tell you what the future holds for the financial system as we know it. Will cryptocurrency become a cornerstone or fall off of the face of the earth? That's yet to be seen. Nonetheless, there is one thing that we do know. As technological innovation continues to merge with the finance industry, the evolution in the world of finance has just begun.