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December 5, 2021

The Future is Fast in Finance

We are in a different era from what the world had previously known when it comes to finance. Now, people expect a certain level of efficiency when transacting. Modern technology, especially incorporating the advances in the internet, innovation, blockchain, and cryptocurrency advances gives us these conveniences. If tokenization continues to progress, as many expect, we should hope to see more financial access and more financial options.

A More Equal World

History has shown that when equity is distributed or airdrops done all in an appropriate manner, finances are distributed more freely and fairly than if corporate entities had done it. Unfortunately, the other side of things is also true. This approach is prone to exploitation and scams. Regardless of which side, blockchain technology allows money to move faster globally than the regular banking and payment systems. The technology also offers more control to the direct user, instead of the middlemen. This fact is pivotal when we consider globalization and investment in particular.

What DO We mean by “Speed”?

In regular systems, financial transactions involve orders being placed and people conducting business with others they had established credit lines with, trusted, or offered some credible type of guarantee. In traditional finance, a cheque or money order, for example, require a number of steps. All these steps require procedures to be followed for the transaction to be successfully carried out. Funds are not moved until all the necessary procedures are carried out to their satisfaction.

Then Came Paypal and Others in Finance

After the traditional approach proved lacking, service providers like Paypal sprouted. Others like Mastercard, Visa, and Venmo started carving out a piece of the financial services “pie” for themselves. Regardless of these new services, the traditional model still remains strong. Regular banks sometimes shoulder a certain level of risk to ensure processes appear to move faster to lessen the delay for the end-users. So, the speed gains are not in reference to the network and infrastructure that’s used. Rather, the reference is in regards to the settlement of transactions. This stage is faster than banks, even between complete strangers. Crypto transactions and settlement are combined. For this reason, it’s considered “digital cash”. Once sent, it moves to the recipient directly within 10min and costs about $3.

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Where Crypto Outshines them all in finance

There is one thing that other options like Paypal, Mastercard, or Western Union can not do. All these options and many other providers can not send and settle a large transfer on the other side of the globe in 10 minutes. Collaborative financial projects have new opportunities through cryptocurrency’s capabilities. It is possible to see continued progress with DAOs and crowdfunding campaigns of the future.

Constitution DAO is one prime example. The efforts that Constitution DAO made by raising US$ 40 million in only a week among strangers to purchase a copy of the United States of America Constitution was amazing. In the mainstream, there would be a lot of noise for a venture capital fund of the same value. Yet, crypto managed to raise this in 7 days for 1 cause, albeit, not a business use case. However, the scenario can easily be adapted or considered as a business concept. In fact, this has already begun for venture capital funds for crypto projects.

With money transactions going so fast, it seems the analyst will be left in the dark, and knowledgeable investors will end up finding that the very last decision they make will have to be based somewhat on “hunks”. Perhaps a new type of role or skill set will evolve where an analyst was needed.

The Promise in SPACs

SPACs or Special Purpose Acquisition Companies are showing us what the future could hold. This type of entity uses the stock market as a venture-raising instrument. They focus on acquisition and not early funding though. Maybe crowdfunders and startups will turn to such an option for their venture capital needs too.