INDUSTRY INSIGHT
The financial technology (fintech) revolution is happening at a remarkable rate. It has already changed the way we use, manage, access, store and exchange money. Fintech strives to deliver financial services to individuals and businesses in a more convenient, more cost-effective, time-saving way.
At the coalface of this revolution are digital currencies, or cryptocurrencies. They’re quick, convenient and are fast becoming a permanent fixture in modern societies and beginning to replace physical paper, plastics and coins.
This is because by their very nature of being digital and global they are responding to the needs and demands of an increasingly tech-driven and globalised world.
Digitalisation of every part of our lives is not going to stop, nor indeed go backwards nor slow down — in fact, it will only gain momentum. We can expect, therefore, digital currencies adoption to soar.
Advocates of digital currencies, highlight that that they offer a level of privacy that is not found with other payment methods. Indeed, cryptocurrencies cannot be counterfeited and fraud is practically non-existent. In addition, another major ‘plus’ for many supporters of digital currencies is that they provide an independence from governments. A global network of computers uses blockchain technology to jointly manage the database that documents transactions.
Since cryptocurrencies are not bound by exchange rates, interest rates, transactions charges or other charges of any country, they can also be used internationally without experiencing some of the limitations of physical, or fiat, currencies.
Financial inclusion is another major part of digital currencies’ appeal. There are an estimated 2.2 billion people with Internet access or mobile phones who don’t currently have access to traditional exchanges. These individuals are arguably primed for the cryptocurrency market.
Compared to cash (in one form or another), which has been around since the Iron Age, digital currencies are still in their infancy.
It could be argued that many of today’s cryptocurrencies are just testing the water of what is possible and popular. It can be expected that they are doing the groundwork for even more innovation to come in the coming years.
But the attraction of cryptocurrencies now and in the future is in allowing people ultimate control over their money, with quick, secure global transactions, and lower transaction fees when compared to all existing physical currencies.