With the advent of digital currencies like bitcoin, Ethereum, ripple and a host of blockchain based projects, the traditional currency is facing a threat of extinction. Paper money may not be destroyed completely, but it will definitely receive a huge blow from safe, smart and speedy transactions of cryptocurrencies. Does this mean that the future of finance will be totally different from what we imaged ten years ago?
How will your money change?
At this moment, it seems highly likely that cryptocurrencies will become mainstream, even if they don’t completely throw paper currencies backed by central banks to the dustbin. Our transactions will become faster, smoother and safer. This is not all; we will enter a future that brings true globalization our way. There will be no boundaries and people will be able to interact with each other, send money and trade using digital currencies only.
Of course, there will be multiple cryptocurrencies in the market, but a basket of 10 to 20 top currencies will be accepted the world over. Trading one currency for the other will be a matter of seconds, and the financial system will become more transparent. Even the banks will eventually have to shift to blockchains to reduce cost and honor customer sentiment.
What about lending?
If there is one industry that will be completely reborn ten years from now, it will be lending. Several digital lenders have already started emerging which will go on to be market leaders in the next decade. The lending process- righty from application to approval and loan disbursement to repayment, will be handled on the blockchain. In fact, entire transactions will be done through cryptocurrencies, whose market values will stabilize by that time. At least mortgages will have shifted to this digital network in the next decade as they demand more record-keeping.
Short term loans may still be operated in fiat currencies like the GBP. However, they will also not be completely untouched by the digital currency revolution. Therefore, it is highly likely that people will be getting peer-to-peer loans from people around the world and repay them using smart contracts or other such blockchain concepts. Bitcoin-based lending could become a reality very soon, especially in the short-term loan segment. The revolution will begin from FCA licensed creditors like Mr. Lender who will be using simple wallet transactions to lend people money in the future.
Money in the future will be paperless, and our transactions will be cardless too. Payments will become mobile, whether you are paying for groceries or for your monthly cable subscription. Dollar, GBP, and Yen will not be out of circulation completely in the next decade, but they can certainly be out of fashion.
Overall, we are looking at a more robust, more transparent and less wasteful financial system that will help small finance companies and small lenders and debtors as much as it would help big sharks in the market. This could be the best time to be alive, especially considering that such a world will solve problems related to foreign remittances and inflation while reducing fail rates or transactions.