The world of banking, trading, financial advice, and financial goods seems to be transformed by FinTech. The industry is booming, with new players getting an economic advantage for both customers and companies to redefine the financial sector.

5 Basic Things Every Person Should Know About FinTech

Fintech research shows how the evolving FinTech sector is dominated by rising investment, increasing deal sizes, high numbers of merger & acquisition engagements, and the widening geographical distribution of contracts.

The worldwide FinTech industry was worth approximately $112 billion in 2018, a 120% rise from last year, as per a KPMG report. It keeps growing as the world is now more about digital money than anything else, drawing attention from people all over the world.

We have extracted the five basic things that every person should know about FinTech.

What is FinTech?

Any technical advancement in financial services is widely described as financial technology. To disrupt conventional financial markets, those participating in the industry create innovative methods.

In developing these innovations, numerous start-ups have been participating, but many of the world’s largest banks, including HSBC and Credit Suisse, have also developed their fintech concepts.

Fintech firms use technology for more sophisticated software systems such as AI and big data, as commonly accessible with payment applications. Many fintech businesses use mobile technology, big data, and superior analytics to customize goods for different consumer groups.

FinTech Practitioners

Of course, banks are big consumers of technology, but Fintech also places technology at the core of providing financial services, radically transforming how businesses communicate with their customers.

This explosion of Fintech has had a range of positive societal impacts, including greater competition, lower consumer costs, and broader access to financial services for the generally disadvantaged. And Fintech’s advancement has only just begun.

What is Blockchain?

Blockchain is a DLT, Distributed Ledger Technology. It implies to keep records on a distributed database network of all crypto-currency transactions, but it does not have any official ledger.

Blockchain safeguards the database via encoded blocks. Different blockchain specialists agree that technology, not just financial services, will provide accountability for a wide range of different industries.

Bitcoin-founder Nakamoto designed the initial blockchain structure to work as the shared database for all bitcoin transactions.

What is Cryptocurrency?

A cryptocurrency is a decentralized digital service that works to convert data into code. It is securely encrypted to create currency units and verify transactions irrespective of a primary bank or financial institution.

The most popular form of electronic currency is Bitcoin and ether. But there are other types also, such as Litecoin, Ripple, and Dash.

What is Bitcoin?

‘Bitcoin’ is the first and one of the most popular cryptocurrencies used among dealers in the context of digital payments.

It all started when, under the pseudonym, Satoshi Nakamoto, an anonymous individual(s) designed bitcoin as a peer-to-peer (P2P) trading platform without any centralized power requiring regulation.

Nakamoto described bitcoin in an introductory white paper presenting the virtual currency as a solely peer-to-peer variation of digital money (which would enable the digital transfer of money from one party to another without going through a banking sector.

What is a Smart Contract?

A smart contract is a self-executing agreement explicitly programmed into code lines with the terms and agreements of the deal between producer and consumer.

Smart contracts are mostly used in blockchain and save tremendous amounts of high costs involved in processes that a person needs to execute.

For instance, the contracts in Ethereum are interpreted as decentralized scripts saved for future execution in the blockchain network.

FinTech services will be an essential part of our everyday life as we step into the 2020s. It will keep expanding, which stresses the need for individuals to know about FinTech and its fruits to benefit from it.

iLounge author Lucy Bennett

Lucy Bennett is a Contributing Editor at iLounge. She has been writing about Apple and technology for over six years. Prior to joining iLounge, Lucy worked as a writer for several online publications.