Crypto companies’ influence on the Fintech industry is increasing
Rising cryptocurrency value is causing a tectonic shift in the banking sector. There is little doubt that the term “fintech” is taking on a whole new meaning with the advent of bitcoin, cryptocurrencies and blockchain technology.
The blockchain industry is expected to grow from $7.18 billion in 2022 to $67.4 billion by 2026, with most of the growth coming from the United States. The widespread use of blockchain technology has made smart contracts and digital identities available, which, together with an increase in venture capital funding and investment, is a major driver of the market’s rapid development.
By 2027, the report predicts that blockchain-focused businesses will account for $67.4 billion, or 17.64% of the total estimated value of $382 billion. According to research provided with Finbold on September 20 by Utility Bidder, five of the ten most influential fintech companies in 2022 are crypto companies. An overall fintech index score was calculated by considering a number of variables, such as a company’s value, funding, social media following and online profile visibility.
OpenSea, the largest non-fungible token (NFT) marketplace, with an overall fintech score of 8.61, ranking it second among the top ten businesses and highest among blockchain and cryptocurrency firms. It was just behind personal finance startup Chime.
Is Crypto Conquering the Fintech Industry?
The average bank customer in a nation with a stable primary currency has limited understanding of cryptocurrency. Unless they are already committed crypto enthusiasts, these buyers will not see much value in switching from fiat cash to cryptocurrencies, and some may even view cryptocurrencies as overly dangerous.
However, in regions where currencies are volatile, both cryptocurrency usage and acceptance rates are higher. Bitcoin, for example, has gained a lot of popularity as a safer alternative to the bolivar in Venezuela after the bolivar’s rapid devaluation.
In addition, the roughly 1 billion individuals globally who have access to a mobile device but no bank account are finding cryptocurrencies to be of great interest. Customers who are “unbanked” have limited access to conventional banking services, but have greater access to cryptocurrency-based goods.
These days, smart contracts are one of the most talked about innovations in the fintech sector. In terms of technology, smart contracts and defi need the use of the Ethereum cryptocurrency and the blockchain. However, we believe that the new business models and development paths that can be enabled by these technologies are much more exciting than the technologies themselves. Consider the importance of liquidity, a key component of financial markets. For a market or exchange to function well, it must attract a large number of buyers and sellers who can maintain a stable price and conduct frequent trades. But how can an automated exchange generate a liquidity pool? To facilitate cryptocurrency trading, defi organizations have established a liquidity pool by sharing profits with liquidity providers.
The future of Fintech
Fascinatingly, the analysis estimates that the fintech industry will be valued at more than $171 billion in 2022, and that this amount will grow to more than $228 billion by 2024.
In terms of investments and Google searches in 2021, the statistics show that Robinhood was the most prominent financial technology business.
Accepting cryptocurrency allows businesses to sell in international markets where accepting traditional credit cards is impractical. Credit cards were not designed for the Internet, and crypto has proven to reduce high fees, increase payment transparency and efficiency, and eliminate fraudulent transactions. This is according to Stephen Pair, co-founder and CEO of BitPay.
Traditional financial institutions have been criticized by customers for their painfully long transaction approval times. This is mostly due to the multiple levels of bureaucracy often involved in such processes. Anyone who has ever tried to move funds internationally between two banks knows how time-consuming it can be. Problems arise even when you move money across financial institutions within the same nation. This means that crypto and decentralized finance are likely to be adopted by fintech firms in the near future.
A demand for decentralization and trustless transactions, both of which are lacking in today’s financial system, have contributed to the rise of cryptocurrencies, but catching on to this new technology will not be easy.
It should also be said that cryptocurrencies are vulnerable to a number of risks, including price fluctuations, security breaches and exchange rate fluctuations. Concerns have also been raised regarding the potential for bubbles, money laundering, organized crime and terrorist financing. But apart from these risks, it should be highlighted that cryptos can provide a lot of convenience and comfort in the banking system and financial services.
Half of the most powerful fintech companies in 2022 were in the cryptocurrency and blockchain space, which has been heavily impacted by the bear market and marked by multiple bankruptcies and regulatory uncertainty, so their findings are all the more fascinating for that.
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