There are currently over 4,000 cryptocurrencies in the world, but just 12 years ago, the first cryptocurrency, Bitcoin, came into existence. While the true identity of its creator remains a mystery, the innovator who called himself Satoshi Nakamoto’s motivations behind releasing Bitcoin on the precipice of a global financial crisis is clear. Bitcoin’s impact on the financial world was going to be – and is – tremendous.
Today, payments with crypto are creating a new norm within the fintech industry. Crypto provides a safe and highly-efficient way to transfer money while dramatically reducing the risk of fraud. For these and other reasons, Crypto is transforming the world of fintech, especially for unbanked and other underserved markets.
What is a cryptocurrency and how does it work?
Cryptocurrencies are digital or virtual assets that are secured by an encryption technique called cryptography which prevents users from duplicating or counterfeiting the funds. How? The digital coins or tokens are stored on an expansive and public digital ledger, otherwise known as a blockchain.
On the blockchain, all transaction requests are stored on “blocks,” before being broadcast to all network members for verification. A process called mining verifies the transaction information of each cryptocurrency being exchanged, thereby making the crypto payment network more trustworthy and secure. Mining can also be used to produce new and more cryptocurrencies.
What is Bitcoin? It’s the world’s first, and perhaps most famous cryptocurrency, mined for and exchanged on the blockchain.
How blockchain changed the way we make payments
From easy identity verification and more expansive mobile responsiveness to the acceleration of everyday transactions and reduced risk of fraud. Blockchain and its growing trends have already injected much speed, ease, and security into the world of payments with crypto. And there’s still much of this promising avenue that has yet to be explored.
Blockchain has also made payments more transparent. As the distributed ledgers are fully visible to all participants, everyone is able to understand the full scope and history of all assets on the immutable ledger. This distributes trust, opening the doors to more businesses and customers transacting across borders.
How & why crypto has helped the fintech industry grow
The future of fintech is crypto. Fintech and crypto will continue to change the way assets are paid for and managed for businesses and individuals alike. In fact, financial experts predict that blockchain could transform financial institutions, long-plagued by stagnation and antiquated processes.
Secured on the blockchain, crypto can enable the fintech world to democratize the global economy while providing tools for better, more open, and fair trade. In this way, the fintech technologies developed will allow the entire industry to grow, benefiting the financial institutions, as well as everyday users alike.
In today’s digital world, crypto and fintech go hand-in-hand. The digital assets allow for more reliable and efficient transactions, while the tech developed for the financial industry enables its easy access and use. For people who have yet to adopt digital payments and banking, crypto can be their first step into a wondrous, secure, and highly-promising world.