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Shaping the future of finance: An inevitable crypto and fintech synergy

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crypto and fintech

The growth trajectory of cryptocurrencies over the past few years has been remarkably impressive since the evolution of the Bitcoin in 2009. In 2019, the cumulative market capitalization of cryptocurrencies grew by $109.32 billion to $237.1 billion, from the 2018 value of $128.78 billion, with Bitcoin alone hitting a total value of $144.96 billion. The disruptive potential of cryptocurrencies to transform the global financial landscape has led to its evolving widespread usage in the provision of financial services. 

With the not-too-surprising interest of fintech companies in leveraging the use of cryptocurrencies and blockchain in the provision of improved financial services, there is almost no doubt that the future of finance would feature an inevitable fusion of cryptocurrencies and fintech.

In 2019, European fintech giant, Revolut, had a whopping £93.3 million worth of crypto assets held by its customers, from its 1 million active crypto clientele. The fintech unicorn, which currently supports six cryptocurrencies, also owns its own cryptocurrencies, and offers crypto services for its customers. Gradually, the company is progressively weaving cryptocurrencies into its stack of financial technology service offerings.

In the United States, several fintech firms, like Square and PayPal, are already integrating crypto services into their stack of fintech services, with Square’s Cash App and PayPal’s Paxos, amid others, promising to merge cryptocurrencies and fintech to advance the landscape of global finance.

The exploration of a possible elegant intersection of fintech and crypto is rooted in the search for a solution to the dysfunctionalities and limitations that are associated with financial organizations and their products. A lot of financial institutions grapple with the issue of security and centralization, which makes transactions consume more time and cost to get processed, and also increases the risk of financial fraud, in contrast to crypto-powered financial systems. The ability of crypto to address a lot of the challenges associated with traditional financial systems does not pose a threat to these systems, rather, it provides an opportunity for an embrace of the two systems, to bridge the gaps in the financial industry.

With the merging of crypto and fintech, it would be possible to improve the security of global payments, and also make financial institutions independent from the government or other central authorities so that the rigid centralization that stiffens the system can be collapsed. This would also translate to a reduction of some organizational expenses, an eradication of the banking commissions associated with processing transactions in non-crypto-powered financial institutions, and the provision of a better experience for users. 

The infusion of crypto in fintech services will also accelerate financial inclusion, the use of mobile banking services, and also broaden the reach of fintech companies. This is possible because crypto-based fintech products provide a universal currency for financial transactions, and a more flexible and an easier way to be included on the global financial map since there would be no need for the cumbersome paperwork required to access financial services from banks and other non-crypto financial institutions. These, and many more, position the future of finance to feature an inevitable marriage of fintech and crypto.

Earlier this year, Visa released a statement in which it recognizes digital currencies as an exciting avenue for them “to expand their network-of-networks to support new forms of commerce” and also reshape how money moves across the globe. This is a clear indication of the company’s affirmative stance on the power of cryptocurrencies, and blockchain, to transform financial technology.

Standard Chartered Bank has also revealed its intention to take financial technology services to the next level through the integration of crypto with “regular” fintech. It revealed that a crypto custody offering for the institutional market is being developed by its venture and innovation arm, which would become “one of the most secure crypto custody solutions on the market.” The company operates in about 70 countries. This hints on how broad their project will spread, globally. With large financial firms thinking along this line, it is inevitable to have widespread financial products that leverage the intersection of fintech and crypto.

Swiss financial services company, Seba Crypto AG, has raised $104 million as it plans to build the first crypto bank in the world. A lot of fintech companies have also developed other crypto offerings, like debit cards, as the buzz around crypto continues to increase. Monolith visa card, cryptobase card, coinbase card are some of the available crypto debit cards in the market today.

Considering the trend of activities in the global financial industry, it is evident that blockchain and cryptocurrencies will play an integral role in reshaping global financial systems. From PwC’s 2019 global fintech survey, 40 and 41 percent of 500 top executives surveyed from companies  in Technology, Media and Telecommunications(TMT) and Financial Services(FS), respectively, believe that blockchain is the technology that will drive change in the fintech industry, according to the 2019 PwC global fintech report. As the world embarks on a journey to reimagine and redefine the future of finance, current financial trends indicate that a fusion of fintech and crypto will be crucially pivotal.

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Kehinde is a driven human who is passionate about leveraging technology to transform the future of humanity and the way we all live. His interest lies in constantly getting valuable information and being part of a mission that seeks to create a transformative radical shift.

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Bitcoin

The Great Mining Migration from China to the U.S. Explained

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Bitcoin mining

Coming off the heels of China’s now infamous crypto crackdown, the mining rate in the U.S. has now surpassed that of China for the very first time. With a hashrate – a term used to describe collective computing power of miners around 35.4% in July, the hashrate in the U.S. is up 428% compared to September 2020.

In a move dubbed the “great mining migration“, miners in China had been moving towards more crypto friendly countries since May, when the Chinese government called for a crackdown on bitcoin mining and trading. Some of the locations thought favorable enough to entice mining operations include Central Asia, Eastern Europe, the U.S. etc.

However, it is important to bear in mind that mining operations are extremely energy taxing. For said reason, many of the bitcoin miners who had migrated to the U.S. set out for the U.S. state of Texas, one with one of the lowest energy prices in the country. Another favorable advantage for miners moving to Texas is the crypto-friendly political atmosphere regarding cryptocurrencies.

A criticism often levelled at bitcoin mining is that it is bad for the environment and certainly so seeing the enormous amounts of energy bitcoin mining requires, most of which is supplied from fossil fuels. The mining migration has brought about a trend where miners are actively seeking out renewables and or nuclear power, especially in the U.S. Miners are now clustering around states such as Washington, New York and unsurprisingly Texas.


The U.S. is not the only country to have benefitted from the aftermath of Beijing’s anti-crypto policies. Kazakhstan, the central Asian nation has also seen its share of the global hashrate grow with current levels around 18.1%, just behind the U.S. However, many believe that the Central Asian nation is just a junction on the larger trend of miners moving westward. Also, considering that most of Kazakhstan’s energy is derived from coal and a new law to further tax crypto miners in 2022, It stands to reason that many mining operations will eventually migrate from Kazakhstan.

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Business

From Libra to Diem: What happened to Facebook’s Digital Currency plans

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Facebook digital currency
Source: Getty Images (modified)

In 2019, Facebook Inc. announced the Libra, a digital currency project being developed by the company. Libra was unveiled to be a blockchain based stablecoin backed by bank deposits and short-term government securities and was to be integrated into Facebook’s services like Messenger and WhatsApp. The Libra blockchain was said to be able to handle 1000 transactions per second, in stark contrast to Bitcoin’s 7 transactions per second. Needless to say, the news that the largest social media company was working on a cryptocurrency rocked the market for a while. But for some reason, we haven’t seen anything really significant happen since then. Why?

First off was the regulatory hurdle. It would appear that Facebook realized that it didn’t have top marks in the trust department, especially in public opinion. To this end, the Libra project was grilled by U.S lawmakers in July 2019 and the central theme was the issue of trust and data privacy. Other regulators also commented on the issue, with European Central Bank board member Benoit Coeure reportedly saying that digital currencies such as the Libra could challenge the supremacy of the U.S. dollar. Similarly, France’s and Germany’s finance ministers at the time had expressed concerns over the Libra, citing risks around financial security, investor protection and anti-money laundering laws.

Libra also faced the hurdle of its project partners dropping out of the initiative. Founding members eBay, Visa, Mastercard as well as PayPal withdrew from the project which may have had a hand in stalling it. The regulatory scrutiny surrounding the project and Facebook’s own unpalatable reputation might have influenced the decisions of the partners who left the project.

This story would be incomplete without mentioning the efforts at rebranding which morphed the project from Libra to Diem in late 2020. These efforts may have been subtly aimed at distancing the digital currency from the scandals and scrutiny that plagued Libra as a result of its association to Facebook. However, those efforts haven’t been particularly successful. As a result of these factors and more, the Diem association scaled back its earlier hoped for global launch and instead settled for a U.S. stablecoin. That doesn’t seem to have happened.

All in all, it would appear that Facebook is adamant in the pursuit of this blockchain system. However, regulators aren’t completely convinced. The headache seems to be about the issues around it’s possible widespread use, considering the amount of Facebook users. The apprehension is about such a currency’s competitive power with other fiat currencies as well as privacy concerns.

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Africa Blockchain Institute

Africa Blockchain Institute Organized The First African Blockchain Summer Bootcamp For Teenagers In Ghana

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In the spirit of catching them young, the Africa Blockchain Institute organized the first-ever Blockchain Summer Bootcamp for teenagers (age range 13 to 19 years old). A successful Bootcamp, according to the participants’ testimonials and stakeholders, held at the OpenLabs, Ring Road, Accra Ghana, between Monday 2nd August, and Friday 6th August 2021. 

The teenagers applied from across Africa, and selected participants all converged at the OpenLabs, Ghana, for an intensive five days of learning, interacting, and implementing personal  Blockchain projects. The participants were divided into three significant tracks, thus; Blockchain Development, Blockchain for Creatives and Blockchain Entrepreneurship. 

Blockchain Summer Bootcamp for Teens by ABI
Blockchain Summer Bootcamp for Teens by Africa Blockchain Institute

Across these three tracks, the teenagers learnt introductory units to Blockchain Development for societal challenges, Blockchain evangelism, Non-Fungible Tokens, and how Cryptocurrency works. Another highlight of the program was the excursion to the Accra Digital Centre, where the Boot Campers were introduced to the tech ecosystem and feel of the Ghana Tech Lab and Accra Innovation Hub spaces. A visit was also made to the Museum of Science and Technology, and the teenagers got to understand the history of technology in Ghana. 

Worthy of mention was the panel session aimed at motivating the students to pursue a career in technology. While making his comments during the panel session, the founder of BankLess Africa, Mr. Muntala Mohammed Shaibu, urged the teenagers to stop seeing themselves as too young to experiment with new technologies. In her remarks, Ms. Elohor Thomas, CEO & Co-Founder of CodeLn, urged the teenagers to continue to explore their interest in technology and blockchain early.

Blockchain Summer Bootcamp for Teens by ABI
Panel Session, Blockchain Summer Bootcamp for Teens by ABI

The Bootcamp ended with personal project presentations from the Blockchain Development and the Blockchain for Creatives & Entrepreneurship tracks. Projects such as NFT blogposts, Blockchain product reviews and Blockchain for transport and logistics were presented. The best presentation won the OpenLabs scholarship for Robotics Course. Thanks to Dr Sujith Jayaprakash, the Director of OpenLabs, Ghana, for the offer of scholarship. In his closing remark, the Executive Director of the Africa Blockchain Institute, Mr. Kayode Babarinde, urged the teenagers to continue using the  skills and knowledge gained during Bootcamp to explore Blockchain-related solutions further. We also appreciate Mr. Ganzaro Omar, Chairman, AfroBlocks, for his supports, and fostering collaborations with the Ghanian Blockchain community.

The Africa Blockchain Institute will continue to hold future Blockchain Summer Bootcamp series in various African cities to drive Blockchain knowledge into innovators early enough. 

Oluwaseun David ADEPOJU

Head of Research,

Africa Blockchain Institute. 

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