Cryptocurrency is on its way to becoming mainstream. Today, most Americans have heard about Bitcoin, Etherum, or other digital currencies in the cryptocurrency market today. Moreover, 24 percent said they had heard a lot about cryptocurrency and considered themselves knowledgeable about its investment and applications. Even as NFTs continue to boom and further drive the cryptocurrency exchange, fintech institutions have to reassess what its emergence and permanence could mean for their sector.
Cryptocurrency Opens Up Unexplored Fintech Markets
With consumer appetite for cryptocurrency growing, tapping into the cryptocurrency market can allow a fintech company to explore new markets and services, driving innovation in the industry. Not only is Bitcoin’s prices rising, but demand for it and other digital currencies are also soaring. As consumers flock towards the potential returns that cryptocurrency can provide, fintech institutions are missing out on key customer markets unless they are acknowledging and embracing the use of cryptocurrency by its potential market. For instance, more home buyers and sellers are now applying for crypto mortgages. Major players in the finance industry like The Home Loan Expert LLC have begun to accept cryptocurrency as a medium. Similarly, JP Morgan customers can now allocate 1 percent of portfolios to Bitcoin.
Money Transfer Process Made More Efficient
Another benefit of cryptocurrencies going mainstream for fintech institutions is the reduced costs, which can hopefully be passed onto the consumer and the institution. Traditionally, money transfers can be long-winded and include complicated layers of processing. However, cryptocurrency has effectively obliterated the global barriers for currency transfer, making it easy and simple to transfer money across country and state lines in real-time. This in turn means improved speed, improved customer satisfaction, and reduced transaction costs- all of which fintech can enjoy and pass onto the consumer if they embraced cryptocurrencies themselves.
Reduction Of Fraud
Finally but certainly not least, Fintechs can enjoy heightened security and improved verification systems. This is because cryptocurrencies are built on decentralized ledgers, making their transactions easy to verify. While blockchain technology is not immune to hacking, its decentralized nature makes it more difficult. This means the occurrence of fraud or hacking is reduced for Fintechs and their risks are lowered. Cryptocurrency also relies on cryptography to keep its transactions secure. Therefore as its use in the real world continues to expand to everyday payments and transactions like using cryptocurrency to buy a home, users and Fintech alike can rest assured that their transactions are protected.
On another note, another consequence of cryptocurrency going mainstream is that regulations are also kicking in. Blockchain is also a public ledger of all cryptocurrency transactions, making it easy to verify and track. It helps to eliminate the chances of tax fraud or evasion with cryptocurrency. For Fintech institutions, it reassures them that they can verify its customers are being authentic with their tax obligations, relieving the company of financial penalties for lack of due diligence. One good example is the instance of the IRS summoning payments company Circle to run over customer records.
The widespread adoption of cryptocurrency can only mean positive things for the fintech sector in the future. The sustained demand for cryptocurrency has opened up new markets for fintech institutions and introduced new efficiency routes for fintech, further fueling their growth and innovation going forward.