You might have felt intimidated when you first heard the word “Fintech”. It’s a jargon that is commonly used in the financial industry, but often ununderstood by ordinary people. Despite the many uses of fintech nowadays, many have little to no idea about what it really is.
When you buy your morning coffee and you swipe your card for payment, fintech is involved. When you wire an amount of money to a friend through PayPal, fintech is at work. Even when you do your daily budgeting through an app, fintech still comes to play. We do a lot of things that cross over between finance and technology without realizing it.
However, these are just some of the basic examples of fintech. In reality, it is a broad concept and to fully understand it is a challenge. In this article, we explain to you in the simplest way possible what is fintech. We’ll be taking a look at the popular fintech trends, the technologies involved, and how it is disrupting the financial ecosystem.
This information should not be interpreted as an endorsement of cryptocurrency or any specific provider, service, or offering. It is not a recommendation to trade.
What Is Fintech?
Fintech is a portmanteau of the words finance and technology. Simply put, Fintech is technology applied in the financial services sector including automation and software infrastructures. Its main goal is to simplify how companies do business and help consumers manage their finances at the optimal level. Fintech is an innovation that goes against the traditional way of providing financial services.
But how do we draw a line between financial technology and the traditional financial methods? Experts agree that Fintech is unique to conventional methods in a way that it provides end-to-end complimentary services over the internet. Its ultimate goal is to bring financial services closer to the people. Things like mobile banking, mobile payments, online stock trading, and even cryptocurrency are the offsprings of financial technology.
What Are the Key Areas of Fintech?
The financial industry had a 180-degree turn on the advent of fintech. It redefined and reshaped the trend in almost every financial subsector. It made financial services providers rethink their processes and evaluate where Fintech can reduce pitfalls. As a result, the financial sector has been more competitive in bringing the best service to the people.
Almost every aspect of the industry has benefited from Fintech innovations, but there are certain areas that changed beyond recognition. The application of technology has seen a lot of potential in trading, digital banking, and risk assessment among others. Most companies are pouring their resources into these financial domains.
Insurance is among the financial sectors that highly benefited from the rise of fintech. It has been using technology for years, but insurtech refers to more innovative technologies that ramp up how the insurance industry does business in the most efficient way.
Traditionally, insurance involves a lot of paperwork which takes forever to be processed. Piled up papers, overworked insurance agents, and outraged customers ー that is the picture of staid insurance. But, the development of advanced technologies such as AI and machine learning have brought about significant growth to the insurance domain.
The digitization of the operating procedure has optimized the overall performance of insurance. Machine learning applications have enabled insurers to process more data and come up with customized insurance policies. As a result, insurance services such as claims management and application have sped up, leaving customers at the receiving end.
Among all key areas of the financial industry, banking is disrupted the most by the rise of fintech. The simplicity of banking products and processes are ripe for change, thanks to APIs and open banking. The integration of these advanced technologies has allowed the banking sector to reinvent customer service and provide smarter solutions to business clients.
Mobile and internet banking is the biggest legacy of fintech in the sector. Most of the financial institutions nowadays are taking a “mobile-first” approach to reach out to clients. Using mobile apps, it allows banking services to be more consumer-centric while maintaining financial transparency and private data. The 24/7 availability of mobile banking eliminates the need for over-the-counter transactions and allows remote requests via the internet.
These things don’t just benefit the customers alone. From the bank’s perspective, mobile banking is a great way to cut operational expenses from handling transactions. With P2P payments, electronic bill payments, online fund transfers among others, people no longer have to physically go to the bank for non-cash transactions.
Financial technology also has a crucial part to play in credit and debit. It transforms the credit process by streamlining risk management and speeding up the approval of credit requests. As we all know, all financial service providers have some sort of credit risk management program. This is not for them to entirely avoid risks per se, but for them to make intelligent and rational business decisions.
Before a loan gets approved, it has to go under credit risk assessment. This process can sometimes be dreadful not just for the applicants, but for the creditors as well. But thanks to various software analytics, this has been made easier.
Nowadays, banks use credit scores to determine whether customers have the capacity to pay their loan applications. FICO score is the most common measurement which creditors use in determining the risks in granting a loan. The credit score is derived straight from the borrowers’ past transactions such as payments history, types of past credits, and the amount they currently owned. Alternatively, some creditors use additional intelligence from social media behavioral analysis to assess the success of a certain loan. Naturally, a poor credit score could lead to the denial of loans but there could be another alternative.
P2P or Peer to Peer lending is also making a buzz recently. It is a fast and easy way to lend money from small-time creditors over the internet. Unlike established institutions, it does require a common bond between the borrower and creditors. However, any easy money can be dangerous. P2P lending is not 100% secure since it’s no direct government supervision. Plus, it’s notorious for high-interest rates as well.
Stock Trading and Investment
When we talk about stock trading, the NYSE floor is the immediate picture that comes into our mind. Once the market opens, people are automatically set into their game faces, rushing about the trading floor. This is how stock trading works until fintech was conceived. Although NYSE is a venerable stock exchange, trading on the floor is somewhat becoming obsolete.
It may look exciting, but exchange trade floors are taxing that’s why other stock exchanges are migrating to electronic trading. In comparison to human-based systems, electronic trading uses a network of computers to match buyers with sellers. Traders no longer have to be physically on the floor to be able to land a deal, making stock trading more efficient and faster.
Nasdaq is among the stock exchanges to go fully electronic, from quoting to matching. Using computers, Nasdaq provides real-time buy and sell price quotes. This information then travels to the matching engine for the actual trading. Once the stock is sold, it will also be reflected in Nasdaq’s main computer system.
What Are the Technologies Involved in Fintech?
There is a massive technology involving fintech which is critical for the success of the services the industry provides. Automation, artificial intelligence, and big data are the fingerprints of most of the successful financial technology companies. But the shift towards digitization has brought new innovations such as cryptocurrency and crowdfunding.
We often associate artificial intelligence with robotics, but AI is also a critical aspect of fintech and finance in general. Its applications come in many forms, one of which is through AI-driven software. Hedge funds use AI algorithms to churn out predictions and detect patterns in the stock market, helping them automate their financial decisions.
AI is also massively used for advisory and digital finance coaching purposes. Nowadays, there is a steady rise in the use of transactional bots that analyze spending behavior and help customers manage their personal finance. Some insurance and banking institutions also provide proprietary chatbot apps to help their clients get on top of their finances.
Due to its wide application in many industries, AI companies are growing exponentially and are gaining massive investments. Here are the best Artificial Intelligence stocks that are taking the bag.
Blockchain has been around for a couple of years now and is shaking things up around banking and investment. Enterprises are starting to adopt blockchain technology to create a secure financial ecosystem. It encrypts transaction data and protects them from modification and attempts of penetration. Since blockchain is based on a peer-to-peer network, there is also an inter-node communication protocol that validates new records.
On top of these, tokenization is the greatest edge of blockchain over traditional banking. Using tokens, businesses have the power to use universal currencies instead of relying solely on the official currency of each country. For this reason, many are encouraged to invest in Blockchain stocks.
Robotic Process Automation
Robotic Process Automation (RPA) is a form of AI and machine learning which automates repetitive tasks across different verticals including finance. It uses a Graphics User Interface (GUI) to observe how a user performs tasks and eventually automate those tasks. RPA is commonly used to perform simple tasks like sending system-generated emails. However, it can also perform complex tasks like financial information gathering and database organizing which are taxing when done manually.
Big Data and Analytics
Big Data and Analytics is playing an immense role in revolutionizing the financial service industry. The use of technology has escalated in the advent of wireless connectivity, internet, and mobile technologies. These emerging technologies have fundamentally increased the data that the industry has to process which are too overwhelming for standard data tools to handle. Hence, the need for Big Data and Analytics tools kicks in.
For the finance sector, big data analytics is a critical infrastructure to process the ever-increasing information gathered from our electronic devices. Using powerful algorithms, analytical tools can read patterns from the “big data” and extract valuable information about users with greater statistical power. With big data, banking institutions, for instance, can store data about their customer’s habits and preferences through mobile banking apps. They can use this information to anticipate spending behaviors of customers and create better strategies and protective policies for them.
Who Uses Fintech?
It’s safe to say that everyone uses fintech. You may not be aware of it, but every time you use mobile banking or mobile payment you are already partaking with fintech.
As already mentioned, even swiping your card on the grocery store when you do a supply run is a form of fintech. Even people who are into gaming might have already participated in fintech once or twice when they use their PSN Wallet to buy games or their Nintendo Points to redeem rewards. Unless you are living in a barn, chances are you have already encountered fintech once or twice without you knowing.
But the fintech tools we use on a daily basis are nothing compared to what financial institutions are using. It’s logical that they use more powerful infrastructures to meet the demands and volume of the data they have to handle.
Banks use APIs and open banking to facilitate interconnection with other financial service providers. Traders use electronic trading platforms to monitor real-time online trades. On the other hand, advisory firms are using Robo-advisors in providing financial management strategies with minimal human intervention.
How Mobile Banking and Payments Associated with Fintech?
SMS banking is the early form of mobile banking. It could work in two ways, either push or pull messages. Push messages are the messages coming from the bank which are usually for promotional purposes. But push messages are also used to notify customers of their account status.
On the other hand, pull messages are the ones coming from the customers to the bank. These are usually in the form of codes to initiate requests for account balances, transfers, and other services. The growth in the use of smartphones gave birth to a more secure and efficient mobile banking. Instead of relying on SMS, banks nowadays provide their customers with mobile banking apps.
Mobile banking is considered synonymous with internet banking. Although they may be similar in some circles, they greatly differ in security protocol. Internet banking relies heavily on the web. For you to access your bank account with internet banking, you have to use a website and log in with a password. This process can easily tamper and hackers might be able to steal your credentials in an instant using keyboard capturing.
While mobile banking can only be accessed on the device which has the mobile app or the SIM card registered on the bank. Other banks also implement one-time-passwords sent via SMS that have to be used with the main password when logging with your mobile banking account. Some even use biometrics like fingerprints as an access point.
What is Mobile Payment
Mobile payment is often mixed up with mobile banking when for a fact, they are not analogous. Mobile banking is an extension of traditional banking services, whereas mobile payment is a third-party service that anyone can avail of. It doesn’t necessarily require you a bank account to use mobile payment.
Mobile payment apps revolutionized how people spend, send, and store money. Not long ago, people needed cash or credit cards, but nowadays mobile phones and other smart devices can be used to keep digital money and spend it digitally as well. There is a rapid uptick in the use of mobile payments with the rest of the world shifting to a more efficient payment option. In a report made by Statista, mobile contactless payment users is expected to grow to 760 million by the end of 2020.
Here are the mobile payment services that are to take the most number of shares.
Paypal is a mainstay when it comes to digital payments. What it does is simple, it allows you to transfer or receive funds anywhere in the world with a minimum fee. It integrates your bank account or credit cards into the platform so you could make direct bank deposits, P2P payments, and other electronic payment transactions. With more than 300 million active users, there is no doubt that Paypal is the one to beat. But if you need something beyond it, there might be some Paypal alternatives for you.
Payoneer is a reliable electronic payment service with support to over 200 countries. Much like any money transfer apps, it allows you to transfer funds both domestically and internationally. Payoneer’s $3 flat-rate transaction fee and 24-hour payment processing time are its strongest selling points.
Venmo is a payment solution that has P2P at the heart. It allows users to transfer and receive funds from friends through a mobile app without any complexities. All you need to do is to link your debit account and you are all set. The service is close to Paypal 一 make sense because it is owned by Paypal. However, it’s a bummer that the service is only available in the US.
TransferWise makes sending and receiving money on a cross-border basis painless. Instead of relying on a single international transaction, TransferWise uses two local transfers to bypass the hefty fees of traditional financial institutions. When you transfer funds using TransferWise, it goes to the platform’s local account instead of going directly to the international receiver. TransferWise then pays the receiver using the real mid-market exchange rate in that country. It usually takes TransferWise 2-3 days to transfer your money.
Zelle ditches the usual hefty fees of transferring money. Equipped with a powerful fund transfer system, it allows you to send money using your debit or credit cards free of any charges. However, while Zelle doesn’t apply additional charges, some of the banks using it might. Another downside of Zelle is that it does not have an option to cancel payments. Once the transaction is processed, there is no turning back.
What’s distinctively different from other mobile payment is the contactless payment systems do not require a PIN to perform a transaction. It utilizes radio-frequency identification to secure payment. All you need to do is connect your credit and debit cards to a smart card, or an electronic device that supports the system. That includes smartphones and other mobile devices.
The demand for contactless payment is immense that even the giant phone manufacturer, Apple, enters the picture. Apple Pay puts emphasis on simplicity, all you need to do is to register your bank account to the platform. Once your Apple Pay account is set up, you can use your Apple devices to pay merchants using point-of-sales terminals. You can also use it to send or receive money from other people. Similarly, Samsumg Pay offers the same features too.
It is a payment service that you can also use at point-of-sale terminals or when you are shopping online. If you are wondering what’s the difference of this app with Android Pay and Google Wallet, well it’s the combination of the two. Once Google Pay is set up on your phone, you can easily hold the back of your device at the credit card terminal whenever you are shopping.
Alipay is a QR-based payment service that operates under the Chinese tech giant, Alibaba. Using the Alipay wallet app, users can simply scan the designated QR codes for merchants whenever they are making payments. It can also be used for bills payment, P2P transfer, and ticket purchases. However, it’s a painful process to top-up your Alipay if you are not Chinese.
Firstly, you have to have a Chinese ID to register, and second, you have to have a Chinese bank account to add funds. Thankfully though, Alipay now allows foreigners to register using an overseas phone number and bank account. This will last for three months and is available for those visiting China.
The Needs of Fintech for Personal Financial Management
Fintech also comes to play in personal financial management, even for everyday budgeting. Keeping track of your expenses and making sure that you have enough stocks for the rainy days is hard when done manually. Thankfully, there now software services that can help you streamline your personal finance.
Whether you want to keep your spending under control or want to learn how you can effectively invest, there is a right and best budgeting app for you.
Mint is an all-in-one budgeting app that helps people track outgoing and incoming money. It syncs the customer’s accounts like debit, credit, and even Paypal into the software and extracts the transaction information made for each account.
The transactions are then sifted into categories so users would know where they are spending the most. Besides, it sends notifications on unpaid bills, low funds, or when a transaction was made with an unusually large amount. For security, Mint requires two-step verification using a fingerprint and a four-digit passcode to log in.
You Need a Budget (YNAB)
You Need a Budget, or YNAB is a perfect companion for people who are pretty tight on their budget. It allows users to set parameters on their spending and automatically allocate the money they already have on things that matter such as a mortgage, utility bills, food, and some miscellaneous expenses.
Once your spending in one category exceeds, you will then be forced to cover that overspending from somewhere else in the budget. From the dashboard, the app readily displays your spending so you are always on track.
NerdWallet is a web software created for the purpose of helping users achieve financial security by helping them set their spending goals. It combines the elements of Credit Karma and Mint which gives users insights about their credit score while tracking their spending progress.
However, its budget tracking feature works oddly and tends to shift away from how its competitors do. Instead of calculating income based on the information from the users’ bank accounts, NerdWallet allows users to set an estimated income. All your spending will then be subtracted from the given income to see what you have left to spend in a month.
How Does Insurtech Revolves Around Fintech?
Insurance is among the financial domains that changed dramatically in the advent of fintech. What is known as insurtech, insurance providers now capitalize on technologies in streamlining their services to keep up with the demands of the digital-savvy customers? Aside from cutting operational costs, the application of innovative technologies is changing the business model of insurance in terms of providing risk assessments, calculating premiums, and managing claims. The emerge of insurance startups forced the traditional insurers to reinvent themselves and recognize insurance technology as an opportunity rather than a threat to the industry. Hence, many traditional insurers are collaborating with insurtech to harness the maximum value one can provide for the other.
An example, the collaboration between Accenture and Zurich Benelux, a century-old insurer, has brought a first-of-its-kind project in insurance. Accenture is helping the Swiss company in providing blockchain-based insurance solutions within surety bonds. The collaboration transforms the surety-management back-end of Zurich Benelux into a transparent digital hub and ensures the fulfillment of business transaction terms within a project.
Besides, automation is also being extensively used in insurance when it comes to handling claims and property assessment. Even the big data has also found its value to the industry by helping insurers extract valuable information from unmanageable amounts of customer data.
Here are some emerging insurtech startups that prove the value of technologies to the insurance industry.
Examples of Insurtech Companies
Oscar Health is an insurance startup that provides technology-based health insurance policies for individuals and businesses. The startup focuses on developing a transparent and reliable claims system, which is the fundamental infrastructure for any insurance business. Oscar claims that the system can link claims, payments, benefits, members, and providers in a single network to eliminate the manual processes that are prone to errors.
Lemonade is giving a new face to the property and casualty insurance trade. Following a technology-based business model, the startup automates workflow in every area possible. Lemonade is migrating traditional insurance into the internet and allows clients to sign up, make claims, and receive reimbursements over the web or mobile app. By simply taking a video of the damage to your property, Lemonade can review claims automatedly for a faster turnaround.
Metromile is an insurtech startup that provides car insurance policies on a per-mile basis in addition to a fixed base rate. Similar to traditional insurers, Metromile calculates the base rate based on the customer’s driving habit, as well as the type and the age of the vehicle. Then, using a tracking system installed to the insured car, MetroMile oversees the mileage of the vehicle and adds a per-mile rate to the monthly premium. This type of billing is intended for low mileage drivers so they only pay for what they have used.
Robo-advising and Stock Trading in Fintech
Robo-advising is the next big thing, transforming how people invest their money. With technology, traders can easily automate how they invest and manage stocks without human intervention. Using an algorithm-driven approach, Robo-advisors can automatically adjust investments based on the preference of customers and guide them in making intelligent decisions about their money. In this section, we’ll briefly discuss how Robo-advisors work and how it is disrupting the way people invest.
How do Robo-advisory Work and Its Example
Robo-advisors collect information from customers, such as their financial history and preference through surveys. Using a mix of algorithms and mathematical rules, Robo-advisors process the given information to determine the risk tolerance of customers which is vital in coming up with appropriate investment strategies for them.
The advent of Robo-advisory has added inclusivity to wealth management. Using technology, Robo-advisors lowers the cost of financial advice compared to traditional human intervention and brings the service to a greater pool of people. It also takes significantly less capital to get an account started, which makes the service accessible for both amateur and long-time investors.
There are hundreds of Robo-advisory firms in the US and counting. Most of them offer mixed services like investment management, fund monitoring, and overall financial advice. Here are the best Robo-advisor platforms that can help you grow your money.
Charles Schwab is a forerunner in providing Robo-advisory services. Favored for its minimum balance to enable Robo-advising, the firm provides an app where clients can trade and sell stocks without leaving their couch. It also has a designated tab for trading stocks and bonds, plus a list of stocks that are performing well or expected to perform well over time. Aside from Robo-advising, Charles Schwab also provides commercial banking and stock brokerage services.
Vanguard is an investment management firm that offers a solid selection of low-cost, commission-free investment options from mutual funds, stocks, and ETFs, down to certificates of deposits and bonds. Along with investment products, Vanguard also offers brokerage services, annuities, financial planning, and trust services. For first-time investors though, Vanguard’s initial minimum investment purchase may appear steep. That’s why Vanguard is rather recommended for long-time or retirement investors.
Betterment is a prominent name in Robo-advising with diversification at its heart. The company uses an automated investment model and manages ETFs in mixed asset classes that are based on the customers’ risk tolerance and their goals. For investors seeking control over their portfolio, Betterment has a tool that allows them to modify the amount they invest for a particular ETF type. What makes Betterment a standout is its zero account minimum, making it the best choice for all types of investors.
Ellevest is a Robo-advisor that is on a mission of helping women achieve financial independence. Taking into consideration the financial hurdles for women, such as the gender pay gap, the firm offers investment products with a higher savings rate coupled with professional help like career coaching and retirement planning. Ellevest has a three-tier service with no account minimum and a fixed monthly fee.
Acorns is a mix of Robo-advisor and money-saving platforms which emphasizes an automated financial management approach. The platform rounds up the purchases of customers using their linked debit or credit accounts then transfers the change into their Acorn checking account. Acorns then use the money you save to invest in a computer-managed portfolio. Aside from the roundup’s excess change, customers can opt to manually deposit lump sums into their checking account to quickly grow their fund.
Robinhood is an online brokerage that allows investors to trade stocks, ETFs, and cryptocurrency using the web and a mobile app. What makes it a standout is its commitment to commission-free trading, allowing users to save every dollar they have. Robinhood does not also implement account minimums, but of course, you need enough funds to start investing in the stock you are eyeing on. Set by the Financial Industry Regulatory Authority (FIRA), Robinhood requires investors to have at least $2000 in their portfolio that is necessary to cover for a margin account.
Blockchain and Cryptocurrency in Relation to Fintech
Blockchain and cryptocurrency are the cornerstones of online financial transactions. There is a literal wealth of information to be learned about cryptocurrency and its uses. Aside from acting as a virtual currency, you can also get cryptocurrency jobs and the likes. There is a wide world that you can explore, especially in this age where technology is at its height.
But before anything else, we need to learn what Blockchain and cryptocurrency are. How do they work? Let’s figure out why this widely-used “coin of the internet realm” is so popular, and how it operates. And maybe, you’ll find the best cryptocurrency to fit your lifestyle.
What Exactly Is Blockchain?
Many people assume that Blockchain is cryptocurrency itself, or a programming language that enables cryptocurrency. This is not necessarily the case. Blockchain is an interconnected network that acts as a public ledger of sorts. It keeps track of all transactions done with cryptocurrency and any record of valuable items you may encounter in virtual space.
The concept of Blockchain is pretty straightforward. Blocks contain transaction details and other information. Each block gets added to the public database or network used. One of the most unique qualities of both Blockchain and cryptocurrency is that there is no governing body overseeing these transactions. As such, the database is built by the users, adding on information to other existing information like links to a chain.
The information stored in Blockchain may include the date and time of the transactions, as well as who did the transaction. Though you will remain anonymous, of course. However, Blockchain isn’t just for cryptocurrency. To learn more about its other uses and additional information, check out our introduction to Blockchain.
How Does Cryptocurrency Work?
Cryptocurrency is one of the most popular fintech trends to date. As its name suggests, it is an encrypted monetary transaction with no middle man to facilitate it. Its decentralized nature makes each transaction public, yet still anonymous. Unlike traditional banks, your money isn’t logged on your bank accounts. Instead, it appears on the Blockchain.
For currencies like Bitcoin, you won’t be able to receive verification from banks or other authorities. Instead, cryptocurrency gets verified through an elaborate process of problem-solving. The servers present a network of people with a mathematical puzzle they must complete. The catch? They are racing against everyone else. The first in the cryptocurrency’s network to finish solving the equation creates the official record of the block. This process is what they call mining. The miner who solves the puzzle first gets paid in a specific cryptocurrency.
If you’re interested to know more about cryptocurrency, we cover everything you need to know in this cryptocurrency guide.
The Crypto Exchanges
Just like real-life currency, cryptocurrencies naturally have an exchange rate. As our economy is divided by regional currencies with varying prices, you will need your physical money’s value and find its equivalent in cryptocurrency. Because cryptocurrency relies on peer-to-peer trust, there are several tools available for you to do so. If you know how to trade cryptocurrency, you will navigate the cryptocurrency exchange world in no time at all.
By using cryptocurrency exchanges, you can exchange not only fiat-to-crypto but also crypto-to-crypto. Check out our helpful guide on cryptocurrency exchanges if you want to learn more about this. Meanwhile, here are some cryptocurrency exchanges to get you started on your mining and trading journey.
The Crypto CoinBase
One of the most reliable fiat-to-crypto exchange platforms is Coinbase. The service is as popular and as old as Bitcoin, almost going hand-in-hand. As such, it is the perfect exchange for any beginner thinking about using cryptocurrency. Not only does Coinbase have a comprehensive and rigorous vetting process, but it is also very secure. Aside from functioning as an exchange, the service can double as a cryptocurrency wallet, which we will talk about later on.
To date, Coinbase supports a number of reliable and well-known cryptocurrency coins. These are the following coins you can trade, use, and keep on Coinbase:
- Bitcoin (BTC)
- Ethereum (ETH)
- Ripple (XRP)
- Litecoin (LTC)
- Bitcoin Cash (BCH)
- Stellar Lumens (XLM)
- Dogecoin (XDG)
With Coinbase, you can use several payment methods for faster and smoother transactions. You can wire transfer your money, or link old credit or debit cards to Coinbase. You can also make use of cryptocurrency withdrawal and deposit. If need be, you may opt to use Paypal as well for withdrawal. All in all, Coinbase is a heavy contender in the cryptocurrency trading world.
If you’re looking for a completely secure and all-around cryptocurrency exchange, look no further than Gemini. Gemini exchange is perfect for those who want to exchange much hefty amounts of money without fear of getting hacked or stolen.
Not to mention, this is perfect for those who simply want to trade day by day. With its intuitive and clean interface, Gemini is perfect for keeping track of your daily trades to any cryptocurrency. Most especially, Gemini highlights trading for Bitcoin and Ethereum, thanks to its Orderbook feature that displays their trading prices for each day. You can toggle your settings so that it refreshes at a certain rate. That way, you can track the currency’s growth and make an informed decision before trading.
Gemini supports the following currencies:
- Bitcoin (BTC)
- Bitcoin Cash (BCH)
- Ether/Ethereum (ETH)
- Litecoin (LTC)
- Several ERC-20 tokens (e.g. 0Z, Augur, Basic Attention Token, Bread, Dai)
Virtual Currencies (Cryptocurrency)
Although Bitcoin is the most well-known cryptocurrency on the internet, it certainly isn’t the only one. In fact, you can even create your own cryptocurrency if you wish. Nevertheless, there are several existing virtual currencies you can choose from to get you started.
When you think “Cryptocurrency,” you think of Bitcoin. That’s because Bitcoin is widely considered the first-ever modern form of cryptocurrency. Created by Satoshi Nakamoto, Bitcoin’s roots can be traced back as early as 2009. Its boom began when WordPress started accepting payment in the form of Bitcoin. Pretty soon, other major companies and brands followed suit.
Bitcoin is dubbed the most popular form of cryptocurrency for a good reason. While some argue that cryptocurrency is unpredictable and untrustworthy, it is actually less volatile than people think. Fiat currency or “legal tender” currency is at higher risk for inflation every day. For Bitcoin users, there is set inflation protection to keep your assets safe. Not to mention, Bitcoin pioneered anonymous financial transactions. That way, you won’t have to worry about companies selling your private information to anyone.
There’s so much to do in Bitcoin that we can’t cover in just one sitting. Learn what is Bitcoin and how to mine Bitcoin as well.
Another highly used and trusted virtual currency is Litecoin. Ranking in the top 10 most used cryptocurrencies, Litecoin aims to provide secure transactions for its users. Developed by Charlie Lee, Litecoin comes equipped with security that can withstand flood attacks commonly faced by other currencies. Litecoin’s server doesn’t have to deal with Bitcoin’s blockchain scale issues as well.
Litecoin comes highly valued by cryptocurrency miners and trusted even by Coinbase. Cryptocurrency experts project that Litecoin will sustain its popularity for at least 10 more years. That way, you don’t have to worry about losing your assets anytime soon. If you want to know more about this currency, you can check out our guide to see for yourself if Litecoin is safe to invest in.
Ethereum is relatively new to the crypto game, but is already ranking right behind Bitcoin. While still lagging behind Bitcoin, many can’t help but compare Ethereum vs. Bitcoin in terms of efficiency and security. For instance, this service can process transactions at a significantly faster pace than most cryptocurrencies. With its continuously rising popularity, you won’t have to worry about its value depreciating any time soon.
It is also important to note that Ethereum pioneered a smart contract system for its blockchain servers. Ethereum does away with middlemen and intermediaries to cut the process short. This also ensures both parties in a transaction get what they came for at all costs. Eliminating the middleman ensures a much faster, yet still secure system. If this has you interested, learn how to invest in Ethereum today and save yourself a lot of hassle.
If Bitcoin isn’t exactly your style, then maybe you’ll have better luck with Ripple. This strong Bitcoin contender has polarizing qualities that keep it up to par with the more popular cryptocurrency. One could argue whether Ripple vs. Ethereum is the next best Bitcoin, but you can’t deny Ripple has strong qualities.
Since its inception in 2016, Ripple has seen nothing but growth over the past few years. Its value has been raised three times its original price, which is much more than we can say for other currencies. Its verification process differs from Bitcoin, making it much faster to build blocks. While Bitcoin focuses on staying away from financial institutions, Ripple seeks to improve it. Thanks to its core features, Ripple provides much faster, safer, and easier transactions than your standard bank protocols. To learn more about the benefits of Ripple, check out our buying guide to Ripple here.
If you are looking for a much more stable cryptocurrency, Tether is for you. This unique form of cryptocurrency slightly deviates from its field. While other cryptocurrencies run autonomously, Tether is facilitated by a centralized organization. This “Stablecoin,” while needing certain permissions, promises complete transparency for its investors.
Critics are not quiet about their concerns for Tether’s claims of a 1:1 fiat-to-crypto ratio. But while many are still wary of its regulations, we can’t argue that Tether processes transactions much faster. Not to mention, transaction fees are far cheaper than other currencies. Like with any other cryptocurrency, there is a high risk of trusting any service to handle your money. However, if stability is a major selling point for you, then Tether is the best choice.
Due to the sensitive nature of cryptocurrencies, you will need a place to keep all of your assets safe and secure. And with banks not on the horizon, there is little else to store your coins. Luckily, there are alternatives out there to keep you as secure, if not more.
Digital cryptocurrency wallets may come as hot or cold wallets. Hot wallets exist on the internet. They are much more accessible and easier to set up. However, it comes at a higher risk of susceptibility from hackers and cybercriminals. On the other hand, cold wallets are offline and much more secure. The only catch is that not many cold wallets are universal when it comes to accepting a certain form of cryptocurrency.
For both of these wallets, you will need a set of public and private keys. Private keys are for you to access your account and assets. Meanwhile, you can give public keys to others in order to facilitate trade, sale, and other transactions. These are vital components of any digital wallet.
Other digital wallets such as Coinbase not only act as a wallet but as a market as well. All in all, careful research must be done when choosing your next wallet. To help you out, we’ve compiled a list of some of the most secure cryptocurrency wallets as well as the best Bitcoin wallets.
The Risks and Responses in Using Fintech
Much like any emerging technologies, Fintech is not entirely rainbows and unicorns. Although it is showing a bright future, it is facing regulatory scrutiny due to the apparent risks it poses for the people and the whole financial ecosystem in general. Traditionally, Fintech is unconstrained by the same regulatory requirements applied in other financial institutions. But recent developments are blurring this line and Fintech must strive to respond to a state-regulated business setting.
For many years, Fintech has been invisible from the scrutinizing eyes of governments. But that is about to change as regulators are pushing steps to make the industry more transparent with the help of Regulation Technology.
Regulation Technology or RegTech is a compliance measure that manages regulatory processes within the financial industry using a mix of IT, AI, and Big Data. On the outset of fintech, there has been a rise in money laundering, identity theft, and other types of cyberattacks. Regtech is seeking to combat these by implementing tools that will automatically monitor online transactions in real time basis to mitigate irregularities that might arise.
Data Privacy and Cybersecurity
Data Privacy and cybersecurity are two factors that contribute to why regulators are pushing for stringent compliance protocols in fintech. Above all else, the sensitive consumer and corporate financial data are to be protected the most. But as many entities get connected, the cyber threats in fintech become more vivid that hampers true financial innovation.
For this reason, fintech companies are now adopting the best practices in cybersecurity. Many are now switching to cloud technology for an agile business model and swift banking process. Using cloud technology and cloud computing, fintech companies are given an avenue to manage user data in a secure and trusted infrastructure.
We are no strangers to ICO frauds. Due to the anonymous nature of cryptocurrency, it is susceptible to frauds that can cost millions of dollars. Time and time again, we hear news about cryptocurrency scams and the common reason why people fall for it is its quick return on investment. Some scammers create intensive publicity to gain investments on ICOs that fraudsters already own. Some people use ICO for money laundering, while others are using a pyramiding tactic to encourage more investors before they go untraced.
Due to the illicit activities involving cryptocurrency, some countries have already warned about joining ICOs if not banning it at all. If you are interested in participating in ICOs, here’s an ultimate cryptocurrency guide to getting you started.
Innovation and User Experience
User experience drives innovation and that is true in banking and the financial industry in general. Now more than ever, traditional banks must be able to step up and harness the potential of technology in their business. Even in the digital era, many people are still either unbanked or underbanked; the same segment that has the highest share in the use of mobile devices. This is where alternative financial providers find their opportunity.
The widespread use of mobile devices even in the most impoverished corner of the world has allowed neo-banks to flourish. With user experience in mind, neo-banks and fintech startups have utilized mobile devices to bring financial services closer to people through mobile payment apps, P2P lending, and other innovative means. People switching to banking alternatives is the greatest threat to incumbent institutions. Unless they follow the new paradigm set by fintech, century-old entities will remain at the brink of obsolescence.
How Do You Define Fintech?
The use of the internet for financial transactions is the core concept of Fintech. It can involve the use of mobile apps or computer software as a means to circulate the financial wheels. However, Fintech is rapidly evolving and now involves more advanced technologies such as AI, big data, and APIs.
Is Fintech Safe For Its Users?
Fintech has a promising future that could make financial services cheaper and more efficient. But any technology can be dangerous and as much as it makes life easier, Fintech can also pose potential harm to customers. The excitement that comes with digitization has given birth to the rise in privacy violations, not to mention scams and frauds. That’s why Fintech must be put under consistent regulatory oversight as a protective layer for customer rights.
What Are The Best Fintech Companies?
Big players are evolving to become part of the Fintech ecosystem and it’s safe to say that the Big Four remains some of the best. But competitive startups are also being born that is changing the paradigm of the business. Some of the prominent Fintech companies and startups are Credit Karma, Paypal, Mint, and Stash among others.