Digitalization is a major theme – no doubt about it. Big tech firms from the United States dominate the world and quickly became the largest corporations. Nasdaq 100, the stock market index that tracks the technology companies surged to a new all-time high during the coronavirus pandemic.
However, in the 21st century, digitalization and technology go beyond Apple, Facebook, or Amazon. Digitalization became a goal for the European Union, with its central bank already applying for the digital Euro trademark.
Large companies already have so-called “fintech” departments. From banks to investment houses, fintech quickly became predominant in every organization that wants to keep an open mind about the future. Bitcoin is just one of the products of the rise of fintech – and perhaps the most important one so far.
According to a study by CoinMarketCap, there are almost seven thousand crypto assets developed with a market capitalization of about EUR260 billion. Almost sixty percent of this market capitalization belongs to Bitcoin – which tells us about its importance and the trust investors place in Bitcoin.
Bitcoin combines two keys – one private and one public – and guarantees user anonymity. This is, perhaps, the most interesting aspect of Bitcoin – but also the most controversial. Because of this feature, it facilitates illicit financing operations, worrying governments around the world.
Bitcoin uses cartography. In doing so, it relies on a so-called DLT (Distributed Ledger Technology) viewed by many as the revolutionary thing behind fintech. In Bitcoin’s case, the DLT is responsible for confirming transactions in a decentralized way.
The DLT technology, also known as the blockchain, sparked controversies in time. Some view it as revolutionary, while some others view it as nothing but a sophisticated Excel spreadsheet.
No one can deny the role of fintech anymore, and companies invest in the space already even without any current benefit. For instance, companies have dedicated departments that research the fintech space and stay up-to-date with the latest developments.
It is, in a way, exactly what the ECB is doing with its digital Euro project – it prepares for a possible introduction. No one knows now how and when this will happen. But everyone agrees that it is better to be prepared in advance.
This is exactly why companies invest in fintech at such an early stage. The opportunity cost of being left behind is simply too big.