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Fintech: Forced Financial Evolution

Daniil Danchenko, Catherine Lange

Since the very moment new technologies in finances or “Fintech” was not something extraordinary, in fact no-one took it all that serious. Maybe mostly because of the fact that it got mainstream during the previous financial crisis and whole lot of people considered it just a crutch to minimize losses and lack of money. But soon enough they understood that they were wrong and fintech was facing bright future ahead of itself. Last year it already became bigger than traditional financial services.

And this year it continues to grow. Today, according to the analysis of the open informational sources, annual transaction value has grown above the PayPal, reigning king of the e-commerce payment services. At the moment overall amount of transaction in the network is $1.3 trl. Daily trading value is around $3-4 bln. Furthermore, some experts predict that one day bitcoin will take over one of the kinds of the traditional economy - Visa payment system.

This was not a big surprise for many specialists. For example Thomas LEE, one of the Fundstrat co-founders told Bitnewstoday.com his opinion about that was related with the growing digitalization of the world surrounds us.

«An increasing share of global economic growth is native digital, and ultimately we expect households to prefer using a native digital currency and platform, rather than fiat currencies, that must then purchase goods at varying prices (despite being the same everywhere, given its digital) and in turn, the fiat must run on a payment platform. In other words, digital virtual currencies and assets will grow in increasing importance. And arguably the most important of them today is Bitcoin».

His colleagues share his opinion about the future state of the digital payment ecosystem. Kyle ASMAN, director of the consulting company agrees with Fundstrat co-founder, but he doubts that bitcoin will have the lead role in the future. At the same time he is sure that future belongs to the digital money.

«I believe that the trend usage of digital money is on the rise, though I don’t believe that Bitcoin will ever overtake Visa in transaction volume. A transaction involving one Bitcoin takes about an hour. I do believe, however, that a digital currency will emerge as a real competitor to Visa. Additionally, I think we will see a decline in the usage of fiat money, and digital currencies are the way of the future. I believe that companies such as Visa are already carefully examining this market to ensure they aren’t left behind. I also think digital money will give a lot of economic growth opportunities to people who were held back on a global scale by poor nation-state currencies.».

And considering lots of patents and inventions coming from the international payment systems there is a solid reason to believe that payment systems are getting ready to face the upcoming challenge head on. For example, Mastercard received a patent for a system that allows to process crypto payments through the regular credit cards by pegging them to the existing fiat accounts. Other big players also starting to implement blockchain into the existing workflow of their companies.

Denying this trend is simply criminal, since potential of the digital assets is simply gargantuan and because of the benefits that come with the crypto assets it becomes a question of the economic Darwinism. Are we sure that some of the traditional products will stay the same? It is unlikely that credit cards will change, but rest of products will simply benefit from swapping out fiat for crypto for a very simple reason.

As soon as amounts of business are growing fiat money is not going to have a good time. Because the traditional system of the cashless payments is far from being ideal. So, if mainstream acceptance will continue to grow  digital money will take over the fiat. And unless three giants of the payment system world would come up with an adequate answer, their future as leaders of the industry is very questionable.

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