If you’ve been keeping a close eye on technology, you’ve probably heard people talking about “fintech” for some time now. But what is fintech and why should you care?
Short for “financial technology,” fintech is an umbrella term that looks at how technology relates to finance. Everything from software that connects lenders and borrowers, tools that optimize investment management, and even digital platforms that provide basic financial services like transfers and payments are all part of fintech.
The truth is, much of what’s considered fintech are things that we typically take for granted. But there’s one area in fintech that’s been making a lot more noise than the rest—cryptocurrency. Over the past few years, Bitcoin has solidified itself as one of the biggest developments in fintech, and arguably technology as a whole. After all, before Bitcoin, the concept of sending money to anyone in the world in a matter of minutes without the assistance of financial institutions was virtually unheard of. Then there as the concept of mining, which enabled people to earn real money by using their computer’s processing power to ensure that Bitcoin (or any cryptocurrency, really) transactions continued to run smoothly.
But fintech’s relationship may have started with Bitcoin, but it certainly doesn’t end there. With more tech startups and traditional businesses expressing interest in fintech’s greatest accomplishment, blockchain technology. There has been a surge of projects looking at how to integrate blockchain technology into real-world applications, like processing digital payments, as seen with BlocPal, implementing smart contracts that hold all parties to their agreed-upon terms and conditions. In fact, blockchain technology has played a role in a number of innovative projects, including:
- Machine-enabled lending
- Artificial intelligence
- Distributed ledgers
Have you ever wondered why all de-centralized applications (DApps) and blockchain platforms have their own token, which investors typically hold in hopes of increasing their return-on-investment? That’s because blockchain technology is inextricably linked to fintech. Most platforms, even for projects that have seemingly nothing to do with technology, have tokens and digital wallets which users can spend on real-world and virtual items, as well as trade for other tokens on platforms.
As blockchain technology continues to grow and capture mainstream attention, we can expect to see the fintech industry grow alongside it. What makes this especially interesting is how many of these upcoming blockchain projects service a number of different industries, including digital communications, content development, and even marketing. As a result, it’s highly likely that the lines between fintech and other industries will become blurred as blockchain technology gains more traction outside of financial services.
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