Crypto and blockchain are hot topics, especially for fintechs that are constantly looking for ways to scale their businesses and increase their products' efficiency. Some fintech companies are looking at new ways to do things by bridging traditional forms of finance with the innovative technology behind cryptocurrency.
The crypto and blockchain technology world is evolving rapidly, with new innovators coming onto the scene daily. It's a hot topic, especially for fintechs that are constantly looking for ways to scale their businesses, increase their products' efficiency, attract new customers, and keep existing ones loyal.
Some fintech companies are looking at new ways to do things by bridging traditional forms of finance with the innovative technology behind cryptocurrency. This leads to improving the financial services we see in today's market.
Overview of the Cryptocurrency and Finance Market
The cryptocurrency market has grown exponentially in recent years because of the opportunities it presents for financial institutions. The market was valued at $1.6 billion in 2021 and is expected to reach $2.2 billion by 2026, according to Markets and Markets.
Still, the volatility of cryptocurrencies concerns some businesspeople, but it's important to note that they aren't guaranteed to be profitable. In many cases, it's more about being ahead of the curve and providing more opportunities to users.
Crypto integration is becoming a significant part of financial software development. Last year's Statista report shows that 63% of merchants in the financial services and healthcare sectors are willing to accept cryptocurrency for payments.
Stripe, one of the most widely used online payment services for businesses and developers, recently announced their leap into crypto to allow customers to pay their users using cryptocurrencies. This is one of the latest signs of how large financial firms are warming to digital assets.
As cryptocurrency becomes more mainstream, there is a need for new financial services and products that can be offered to consumers via fintech companies, which is why many of them have adopted crypto.
Cryptocurrency and Payments
Cryptocurrencies have not been a new payment method for a long time. Still, their adoption is becoming more widespread when giants such as Mastercard, Tesla, Amazon, and PayPal implement them in their payment systems. The main advantages of crypto payments are lower transaction costs and greater transparency. However, for financial providers, the key advantage of crypto adoption is access to new customer segments and expansion of the customer base.
For example, PayPal, which first ventured into cryptocurrencies in 2020, expanded its functionality this year and gave users the ability not only to buy, store and sell crypto but also to move digital assets from their accounts to other wallets and exchanges.
PayPal is not the only example. Many major financial companies are reconsidering digital assets: Visa, MasterCard, and Stripe have all announced moves in this space in recent months.
Connecting Crypto and Trading
One of the financial niches where crypto has gained the most popularity is trading. The high volatility of cryptocurrencies allows traders to get high profits in a relatively short time. Therefore, crypto exchange development is rising, attracting more and more users every year. According to Crypto.com Research, there were about 230 million crypto users in 2021.
It's essential to know the difference between crypto and traditional stock trading and how they are related. Crypto trading is a form of digital asset trading that allows anyone with a computer and an internet connection to buy and sell virtual coins. Users can buy and sell virtual coins using crypto exchanges, which have varying rules and procedures.
The biggest crypto exchanges include Binance, Deepcoin, Hotcoin Global, Ecxx, and others.
Some trading platforms like eToro provide even more opportunities, offering mixed assets (stocks, crypto, NFT, ETFs, commodities, etc.). Users can create new trading pairs and make a profit.
Cryptocurrency and Insurance
Despite all the advantages, cryptocurrency is a new and unstable asset class. With the rapid rise in the popularity of digital currency, there is a great deal of opportunity for criminals to take advantage of it. This has led to numerous incidents of hacking, theft, and fraud.
Insurance companies have been dealing with risk for centuries and are well-suited to meet the demands arising from the crypto market. The insurance coverage that they provide can be used to protect both investors and businesses as they navigate this new landscape.
In addition to covering losses due to hacking, insurance can be purchased against theft and fraud. For example, if a user's account was hacked and their cryptocurrencies were stolen, they could file a claim with their insurer, who would then reimburse them for their losses.
Companies like Lloyd's and Relm Insurance are sliding into the crypto insurance game.
Additionally, cryptocurrency exchanges offer insurance policies against hacks or losses from internal employee theft. One such company is BitGo, which protects against theft as part of its multi-sig wallet services.
Tying It All Together
Crypto remains one of the most innovative ways fintech companies can gain a competitive edge. This digital asset fits perfectly into various economic areas, expanding its capabilities and offering more benefits to customers. As such, current financial service entities will only benefit from adopting crypto.
If you are thinking about how to build a fintech app with crypto features, start with a consultation with fintech developers who can define your business goals and match them with tech opportunities. With the competent adoption of crypto into existing business systems, your services can receive benefits that will help you scale and improve.