The exponential growth in the development and accessibility of technology is distinctly likely to become the most defining element of the 21st century. In the midst of this tech boom, the global financial sector now stares at a new category of investment instrument — cryptocurrencies. Volatile in nature, cryptocurrencies are digital assets that possess financial values and can facilitate instant cross-border transfers cost-effectively, while also maintaining a layer of anonymity over the details of the sender as well as the receiver of the finances.
Indian crypto insiders marked the National Technology Day on Thursday, May 11, with a special urge to old and new investors, suggesting them to — ‘embrace crypto’.
“Embracing crypto as a fintech tool can pave the way for a more inclusive and decentralized financial future for people worldwide. Crypto provides an alternative to traditional financial systems as the world moves towards a digital economy. Crypto as a fintech tool has the potential to revolutionise financial transactions, offering benefits such as speed, security, and accessibility. Its decentralised nature fosters transparency and inclusivity, reducing reliance on intermediaries,” Rajagopal Menon, Vice President, WazirX, told Gadgets 360.
The concept of cryptocurrency was first propelled by Satoshi Nakamoto, the anonymous founder of Bitcoin who released the whitepaper for the first ever cryptocurrency in 2009. Nakamoto had described Bitcoin as a ‘peer-to-peer electronic cash system based on cryptographic proof instead of trust, allowing any two willing parties to transact directly with each other without the need for a trusted third party.
Nakamoto’s idea behind the concept of cryptocurrency was to create a way to avoid financial institutions serving as trusted third parties to process electronic payments and taking cuts as service fees.
In the last 14 years since Bitcoin’s inception, over 24,000 cryptocurrencies have made their way into the global financial market. As per CoinMarketCap, over 620 exchanges around the world are tackling the digital assets sector that currently sits at a valuation of $1.13 trillion (roughly Rs. 92,97,619 crore). In 2021, the market cap of the crypto sector had climbed to cross the threshold of over $3 trillion (roughly Rs. 2,45,96,880 crore).
Several nations around the world, including India, are now assessing the requirement and potential use cases of these blockchain-based fintech tools, that are presently infamous for being a financial risk to investors due to their unstable nature.
Over the years, several insiders from the crypto industry including billionaires like Michael Saylor and Elon Musk have predicted that the only way to make the crypto industry a safe bet for the investors is to regulate the industry so that more people participate in it and bring that layer of stability to the sector.
Regulators from around the world, however, are concerned that the use of cryptocurrencies as an alternative to traditional finance could reduce the monopoly of central banks, which currently produce physical cash notes and control the financial stabilities of countries.
Speaking to Gadgets 360, Manan Vora, the senior vice president of Strategy and Business Operations at digital wallet firm Liminal, said that emerging technologies like cryptocurrencies and NFTs are set to play a critical role in the future of finance and fintech.
The aim is to enable individuals and small businesses to access financial services that were previously out of reach.
“Technology will play a critical role in shaping the future of finance and fintech in several ways. Emerging technologies such as Artificial Intelligence (AI), blockchain, and the Internet of Things (IoT) enable financial institutions to improve their efficiency, accuracy, and speed of operations. Financial institutions need to stay abreast of these technological advancements and incorporate them into their business strategies to remain competitive and meet the changing needs of their customers,” Vora noted.
In recent years, several international financial behemoths including JP Morgan, Mastercard, and the Shinhan Bank among others have shown a positive approach towards experimenting with crypto related services.
India, as part of its ongoing G20 presidency, is now working alongside the World Bank and the International Monetary Fund (IMF) to formulate laws to govern the crypto sector on a global level to make the sector safe for investors.
These laws also aim to curb the chances of crypto misuse for illegal activities like money laundering and terror financing.
The use of cryptocurrencies could further promote blockchain technology among tech players as a more environment-friendly way to conduct financial transactions, experts believe.
“Blockchain distributed ledger technology makes it highly convenient for businesses to manage information access to various parties. Blockchain reduces the need for physical paper documents and minimises errors. The adoption of blockchain can significantly reduce overhead costs by eliminating the middlemen to complete transactions. The world is looking for a solution to the prevailing energy crisis and increasing pressure on Earth’s natural resources. Blockchain seems to be the perfect solution to bring change at the grassroots level for creating a greener and more sustainable planet,” said Poorvi Sachar, Head of Operations at Tezos India, keeping in alignment with India’s interest to explore the ways blockchain can be used to tweak existing financial technologies.
Meanwhile, tech players across verticals are marking the National Technology Day today with hopes for a better, more advanced future for their industry.
Former Prime Minister Atal Bihari Vajpayee had first flagged the celebration of technology in free India on May 11, 1999. The aim was to honour Indian scientists and engineers following the successful completion of India’s first nuclear bomb test conducted in Pokhran in May 1998.
Cryptocurrency is an unregulated digital currency, not a legal tender and subject to market risks. The information provided in the article is not intended to be and does not constitute financial advice, trading advice or any other advice or recommendation of any sort offered or endorsed by NDTV. NDTV shall not be responsible for any loss arising from any investment based on any perceived recommendation, forecast or any other information contained in the article.