In the 21st century, communities around the globe are able to fiscally interact in ways they never could in the past. International economics has always been a source of discussion due to its necessity and inevitable conflicts of interests. That discussion has shifted more toward globalization in recent years, rather than divisive competition.
This is without a doubt due to technology. When it comes to economics, the advancement of finance is in the hands of technology. As with many legal and economic technologies, the next great step in fintech could be blockchain.
With the help of blockchain’s decentralized design, finance may be further globalized. To grasp why blockchain will have such an influence, it’s necessary to understand what fintech has accomplished up to this point. Blockchain is currently a goldmine that’s waiting to be utilized in financial transactions.
Understanding Fintech
Individuals outside of finance may not be familiar with the term “fintech.” This may be their first time even reading it. But they may be more familiar with it than they think, as the history of fintech could be traced back to the printing press or the telegraph.
Our technological infrastructures that have shaped modern finance really had their groundwork laid in the 1950s and 1970s with the introduction of things like the ATM. Anybody is interacting with fintech if they use digital lending or remote banking. This is where Western society has found itself thus far, with an increasing reliance on fintech becoming the norm.
But with the cross-cultural connections the internet has allowed, fintech has recently been used to revolutionize money exchanges internationally. For instance, regular consumers are commonly purchasing items from other countries via digital fintech. And a more recent example of this is may be found in the way that migrants have been able to reduce personal bank fees with fintech apps. Despite the everlasting tension existing within international economics, fintech has consistently been a tool to usher in unity via financial transactions.
The Untapped Potential of Blockchain in Finance Circles
As those who follow cryptocurrency news are aware, blockchain has the potential to change financial infrastructures as we know them due to its transparent and strongly safeguarded approach. This should be of particular interest to fintech users because it would strengthen and transform that type of technology. What blockchain offers is transparency and security in financial transactions that were previously unheard of.
This is due to how blockchain makes financial records and transactions available in real-time. It allows for jobs that were previously done manually to be filled by fintech that uses the ledger with less human error. To look at an example of how blockchain could transform financial institutions, consider how it could improve transparency in bookkeeping and audit standardization.
Accountancy is just one example of a field that could be shaken by blockchain-centred fintech, though. It could bring in a new era of finance if it was properly taken advantage of. Instances of fraud could go down. International and illegal transactions could be better prevented. Some people believe it will disrupt banking as we know it too, even going as far as to assume that financial institutions as we know them will either change the way they do business or become defunct. Never before have we seen such a transparent system used with money, especially across borders. Thus, fintech that uses blockchain could be the vehicle for a globalized economy.
Blockchain, Fintech, and the Not-So-Distant Future
Though the discussion of blockchain’s world impact continues, it can still be easy to forget how close the planet is to its potential takeover of our financial infrastructures. Frugal people are already recognizing an opportunity in decentralized ledgers. Additionally, people are learning that banks are not as trustworthy as the blockchain.
This has impacts on financial institutions as well. There is already a movement of traditional financiers working to transfer their infrastructures to the blockchain, and cryptocurrency experts are helping them with this by building security systems that work on a token basis. But there will need to be a form of governance that comes into play before it truly shakes the foundation of finance. Once it’s more regulated, it will probably be incorporated by the world’s prime economic institutions — or possibly supplant them.
This idea goes along with what fintech has always aimed to accomplish: financial efficiency. From the telegraph to the ATM to online banking, the purpose of fintech exists to make money transactions easier for people. In a world of identity theft and bank fraud, blockchain is the next step. It can bring power to the people while still ensuring financial institutions have solid ground to stand on. Though some people believe blockchain will be the catalyst for demise in the world’s economic infrastructure, experts would still do well to understand it and try to use it in their practices.
If you have predictions about the intersection of blockchain and fintech, feel free to let us know by commenting below.
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