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Thursday, February 29, 2024

Cryptocurrency and the FinTech Industry

Cryptocurrecy is a recent phenomenon that has really taken off in the last few years. It has become a buzzword that is trending in the investing world lately, with almost everyone wanting to get in on the hype. But what exactly is cryptocurrency and how did it become so popular? This article takes you through some of the main things that you need to know and also takes a look at how FinTech is catering to its growing popularity.

What is Cryptocurrency?

In short, cryptocurrency is virtual cash (or digital money) that can be used as investments or a form of payment for online purchases. These digital assets can be purchased using your actual money and are usually refereed to as “coins” or “tokens”. Cryptocurrency is not backed by any organisation nor is it issued by a central authority – it merely runs across computer networks and can be bought and sold over online exchanges, and stored in ‘digital wallets’.

The number of cryptocurrencies that are available to users over the internet is growing. Introduced back in 2009, Bitcoin is considered to be the first cryptocurrency to be launched and is arguably the most popular option even at present. Other notable cryptocurrencies include Dogecoin, Ethereum, Stellar, Binance Coin, Cardano, XRP, Litecoin, Bitcoin Cash and Chainlink, amongst many others.

Why is the Demand for Cryptocurrency Investments Increasing?

There are many reasons why an increasing number of people are choosing to invest in cryptocurrencies. Here are some of the top reasons behind its growing popularity:

Cryptocurrency is Our Future:

Though this claim might sound like a stretch, it is true. Even though it is relatively new, this transformational technology has been taking the whole world by storm; and it is here to stay. Cryptocurrencies have already revolutionalised our world and have changed the way traditional financial systems operate – to a point of no return. With its growing popularity, more and more large organisations are seeking to leverage on its low costs and quick processing times.

Potentially Very High Returns:

Though it comes at the cost of a higher risk, cryptocurrencies offer enormously high returns on your investment. Unsurprisingly, this has been the main motivating factor for most people to jump on the cryptocurrency bandwagon, having seen numerous success stories. However, given the nature of cryptocurrency, it might be a good idea to have a comprehensive risk management strategy before you invest, in order to minimise any losses that you may face.

High Liquidity:

The concept of liquidity with regard to cryptocurrency refers to the ease of which a coin can be converted into cash or other coins. High liquidity means that the market is stable and less volatile, with smaller price fluctuations – making it easier to buy and sell. There are various factors that affect the liquidity levels of cryptocurrency – such as trading volume, market acceptance and regulation (between different jurisdictions).

Requires Low Capital:

Unlike certain other investments – such as stock and real estate – investing in cryptocurrency has a low entry threshold, making it easy for almost anyone to start investing. Most cryptocurrency platforms do not need large sums of money to begin trading; it is possible to get started with as little as $100.

Flexible Investing:

Cryptocurrency offers you a very independent and flexible form of investing – which is very much desired by individuals with hectic and busy lifestyles. As the cryptocurrency market is open 24/7, there are no limitations as to when you want to trade. With no opening or closing times specified, you are given the option to buy or sell at any time of the day that is most convenient to you – which provides a great way for you to find a way to squeeze your trading routine into your busy lifestyle.

Why FinTech Should Meet the Demand for Cryptocurrency Investments

With the rapid increase in the popularity of cryptocurrency, the FinTech industry is now seeking to heavily invest in crypto technologies for further expansion. FinTech companies are truly in an excellent position to cater to the heavy demand – with many industry leaders such as PayPal, Revolut and Square already offering cryptocurrency investment as part of their services. Catering to the cryptocurrency demand is a good idea due to a number of reasons:

Provides an Additional Stream of Revenue:

New revenue streams are always welcomed by any company or business as it offers the potential to earn more profits. A growing number of FinTech companies are now looking to offer cryptocurrency exchanges as part of their offerings by packaging it into a premium product with a periodical usage fee.

Attract New Customers:

Offering cryptocurrency services is also a great way for FinTech companies to attract new customers and reach out to a new segment of people. Acquiring these new customers can also provide you an avenue to cross-sell your existing financial products and services to them – which can be considered an important component of your sales strategy.

Retain Existing Customers:

Providing cryptocurrency services can be a great way to keep your existing customers happy as well. If offered on the same platform as your other services, your customers might appreciate the fact that they do not need to download or use a separate app in order to use cryptocurrencies. As such, you may want to consider offering cryptocurrency services as part of your customer retention strategy.

Having a Forward-Looking Vision for Your Brand:

Cryptocurrency is expected to change the future of money management & financial policies and it is imperative that FinTech companies learn to adapt to its ever-evolving demands and needs, simply in order to survive.

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