Advanced technology has had a remarkable impact on personal finance. We now have unprecedented access to money management tools and new trends seem to be emerging all the time. The nature of these trends means that some will ultimately fade away to be replaced by something yet more innovative. However, today’s focus is on a tech development that is becoming increasingly entwined with personal finance in the 21st century – one that looks rather exciting!
Cryptocurrency and blockchain technology are not just trends. They’re reshaping the personal finance landscape. While they’ve long been associated with purchasing and entertainment, such as gaming, cryptocurrencies are becoming more influential in the money space. Traditionally, we have seen them in casinos and many types of online games – you could check out a huge range of crypto slots with ease, and enjoy faster withdrawals of your winnings, plus extra security as a result of playing with crypto. A lot of casinos also offered extra benefits and bonuses for those choosing this kind of payment. There were (and still are) a vast number of crypto-based games at online gambling houses, and casinos helped establish crypto as a mainstream player. Now, though, we’re seeing crypto step into other spaces – offering new methods of saving and spending.
Today, the possibilities for using crypto extend well beyond what we might initially have imagined. From crypto savings accounts to flexible spending options, the new ways to use and leverage virtual assets are creating opportunities that can benefit consumers across all demographics and income levels.
So, how is cryptocurrency influencing personal finance? Let’s take a closer look.
1. Beyond Conventional Banking
Crypto savings accounts are a new and evolving alternative to traditional banking. Instead of storing funds in a standard bank account, where interest rates can be low, decentralized options are providing much more competitive yields. They function on DeFi platforms, allowing users to deposit digital assets to earn returns.
It’s pretty clear why this is relevant to you as a consumer looking for new financial products. The answer is high yields.
While the exact rates will vary from platform to platform, some DeFi apps provide high interest rates on stablecoins (Tether, USD Coin, ETH, etc.). Such an offer will be especially appealing to cautious savers who want to grow their finances without risking the volatility of straightforward crypto investing and trading.
2. Borderless Payments
If you’ve ever had to make an international transfer, you’ll have first-hand experience of just how costly—not to mention slow—sending money across borders can be. Opting for conventional channels like wire transfers or even multi-currency bank accounts to send currencies can result in substantial fees and long processing times. Crypto has been able to provide a solution here by enabling borderless payments.
Due to the decentralized nature of crypto assets like Ethereum, Bitcoin, and stablecoins, they’re not just reliable tools for international transfers, but they’re inherently borderless. A transaction that you send using these currencies can happen in minutes, often with much lower fees made up of network charges rather than international banking costs.
Naturally, this ease of cross-border transfers is helping crypto become a preferred payment method for freelancers and remote workers who operate globally. Since we are, for better or worse, now living in a gig economy, with many needing to take on side hustles to supplement their income, the popularity of non-fiat currencies as borderless payment methods is only set to grow. Plus, the impact that this could have on increasing financial access for the global unbanked could be nothing short of revolutionary.
3. Flexible Spending
With the rise of digital wallets, spending cryptocurrency has become as convenient as swiping a debit card. DeFi apps like Coinbase Wallet and MetaMusk allow you to store multiple crypto assets in one place, as well as continuing to provide payment and remittance options for fiat currencies and conventional banking methods. More and more wallets are now supporting stablecoins, offering yet more flexible ways to pay in digital currencies.
Some wallets even offer cashback rewards in cryptocurrency, with the potential to earn cashback on spending tokens like BTC. Digital wallets are bridging the gap between regular bank accounts and crypto assets, making the latter accessible even for day-to-day spending.
4. Alternative Investment Opportunities
One of the biggest impacts of crypto’s energy into mainstream finance can be seen in the investment market. The arrival of blockchain tech in particular has sparked a wave of new asset classes. Besides simply owning Bitcoin or altcoins, as an individual investor, you can now access NFTs (non-fungible tokens), tokenized assets, and even fractional ownership models. An example of the latter being purchasing a fraction of a high-value asset like an artwork via tokenized securities.
And what else? Well, non-fungibles have opened up a new category of investment for digital collectors due to their ability to be linked to both digital and physical assets. While NFTs have been especially popular in the creative industries, accelerating the emergence of new digital sectors in the process, they’re quickly expanding to the realms of music and even real estate.
5. Financial Privacy and Security
As consumers, we expect our finances and our personal data to remain safe and secure at all times. While traditional banking methods can provide high standards of security, blockchain is proving to be even more airtight. Crypto transactions inherently deliver a greater degree of transparency and financial anonymity that is difficult to achieve with fiat products. Blockchain transactions are recorded on a public ledger, which helps to ensure their secure nature, but they don’t reveal personal information directly.
What’s more, some crypto projects have launched which are designed with privacy as a core feature. Tokens like Monero and Zcash offer enhanced anonymity, making them especially appealing to users who prioritize total privacy in their transactions.
