Home Finance How are digital assets defining the future of finance?

How are digital assets defining the future of finance?

From almost being written off during its inception to receiving legal tender as official currency of a country, the rise of crypto somewhat resembles the story of rise from rags to riches- and that too in just over a decade. According to the majority of digital assets finance champions, digital assets are just at the threshold of mainstream economy and would make a steady entry shortly. Read here more about Multibank.io. A big change is coming that will revolutionize the future of finance and for better.

Interestingly, the concept of digital assets has expanded beyond just cryptocurrencies like BTC- as of now, digital assets finance includes NFTs, Metaverse projects, stablecoins, and CBDCs as well.  A major sign of rising importance of digital assets finance in the existing fiscal market is growing stress on development of policies and programs for these assets. Growing demand for digital assets and their increasing usage signify maturity of the new technology – eventually paving the discussions on creation of a regulatory framework to create a sustainable market for digital assets finance.

The post below offers a brief how digital assets finance is poised to reshape the global financial infrastructure.

How will digital assets revolutionize future finance?

New form of payment system and store of value

Digital assets have offered an alternate payment mode and store of value to the existing financial system. The trend will only grow in the coming future. In fact, a leading bank has already declared that crypto holds the potential to replace fiat by 2030.

Well, the change might not be that radical but we can expect the future mainstream financial market to embrace digital assets finance (read cryptocurrency) as a globally recognized alternate payment mode and investment asset, added to fiat.

Here are some stats and facts that will reinforce the statement made above-

  • Bitcoin has already received legal tender from El Salvador and Central African Republic
  • Over 15,000 businesses use crypto payment today
  • Crypto is the only form of payment for NFT and Metaverse projects- the two key aspects of Web 3.0
  • Tokenization is predicted to touch a whopping $24 trillion in near future, by the year 2027- the figure alone stands for 10% of worldwide GDP
  • Crypto industry received $127 million funding from institutional investors in Q1 of 2022
  • Traditional institutions like banks, that were once averse to digital assets finance products are now coming up with their own set of digital assets
  • Bitcoin is likely to have an awe-inspiring number of 1 billion users by 2030-2032

By offering freedom from centralized bureaucracy in finance

The digital assets finance sector will bring more democratization to the mainstream finance scene in near future.

The traditional finance sector is infamous for its bureaucratic closed-door policy that mostly favors the wealthy. This centralized bureaucratic nature of banks and traditional financial institutions is one of the reasons why a large section of the population around the world is still unbanked.

Growing awareness about the decentralized nature of digital assets finance like cryptocurrency has helped a good lot of the unbanked population to operate with money. For example, Nigeria houses one of the largest unbanked populations in the world.  Today, thanks to awareness about crypto, 32% of Nigerians use crypto for easy payment, money transfer, and investment.

This way, digital assets finance is helping to democratize finance by offering equal and fair opportunity to all, irrespective of one’s financial status.

In fact, one of the major reasons why the Central African Republic has embraced BTC with legal tender is because digital assets finance will help them to create a fair economy, free from bureaucratic bindings.

By assuring more convenient and economical cross-border money transfer

Did you know that digital assets finance like crypto was the only lifeline for war-torn Afghans when a leading money transfer company ceased their operations in the country for a while? Also, did you know when Ukraine started a global crowdfunding campaign to help the country this year, she only banked on Bitcoin?

The above-mentioned facts only prove that digital assets finance is fast foraying into mainstream as a preferred cross-border money remittance method.  Thanks to their blockchain infrastructure, digital assets assure faster, more seamless, and more economical money transfer internationally than traditional money transfer processes. According to experts, digital assets finance is poised to be the go-to form of money remittance- for both personal and commercial use- in the future of mainstream finance.

By providing better Hedge against inflation

A growing  number of companies are fast converting physical assets right into digital assets finance like crypto. The major reason behind the trend is that digital assets finance provides a strong hedge against unwanted inflation. In fact, this is one of the reasons why a lot of people are taking to digital assets finance, especially stablecoins, for cross-border money remittance.

According to experts, the world would witness growing use of digital assets finance for protection against inflation in future. The trend would be especially prevalent in countries that suffer from high inflation, like Nigeria, Lebanon etc.

Future of digital assets- Multi-centered infrastructure

It’s welcome news that such cutting-edge technology like digital assets finance is poised to reshape our mainstream finance system, and for better. But, that won’t be an easy road and the digital asset industry too needs to go through certain changes to attain a respectable stature in the future mainstream economy.

The most significant change that the digital assets finance industry is about to witness shortly is the introduction of a regulatory framework. Keeping aside the trend of increasing adoption of digital assets finance, the industry is still heavily unregulated. And that leads to extreme volatility and an unstable market. As a result, several investors- both retail and institutional- are still apprehensive of entering the digital assets scene.

From the IMF to the national governments to the investors to traditional financial institutions- all are working to build a convenient regulatory framework for the digital assets finance industry.

However, the regulatory framework must not undermine the core decentralized aspect of digital assets- rather the focus would be on creating a revolutionary “multi-centered” infrastructure that would provide space for both regulated market and reformative decentralized environment.

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