Crypto assets are increasingly becoming a popular option for investors. They have the potential to transform the financial ecosystem. They have emerged as a growing asset class that is attracting a variety of investors.
The Growth of Crypto Assets
Over the past few years, crypto assets have garnered massive attention. They offer investors new avenues for investment. Bitcoin has grown into the largest and most significant crypto in the world. Investors can choose from thousands of crypto projects for investment opportunities. These include NFTs, tokens that represent ownership of a specific asset. Other financial institutions are looking to expand their crypto offerings. The potential of tokenization and increased interest in crypto assets are the two major factors driving its growing demand.
Read more: What is Cryptocurrency
● High interest in crypto assets
There has been a rise in interest in crypto assets such as NFTs, crypto tokens, virtual real estate, and more. The global market capitalization of crypto has crossed roughly 20% of the market capitalization of gold in under a decade.
Tokenization has high potential use cases due to its ability to convert any type of asset into a digital token that can be a substitute for the original underlying asset. Assets like commodities, real estate, and art, can also be tokenized. It also unlocks innovation in areas like security management, liquidity, and control.
Crypto Benefits in Finance
● Decentralized Finance (DeFi)
The need for a secure and transparent financial system is rising and becoming more prominent. The current financial systems have failed to provide credibility and financial control to users. Many view DeFi as a system that offers better security and more transparency compared to traditional financial institutions. It has the potential to transform conventional financial processes. The increase in accessibility and demand for crypto exchanges is increasing the popularity of DeFi globally. Crypto assets will continue to push for changes with the rise of modern technology. DeFi protocols are becoming a viable alternative financial system that provides more access to financial services.
● No Intermediaries
One of the biggest issues with conventional payment systems is that they use many intermediaries. Currently, global financial networks like SWIFT are used to process cross-border payments. You can directly send international payments without intermediaries using crypto assets.
● Lower transaction fees
Crypto assets have proven to be a cheap medium for cross-border payments. Intermediaries in traditional financial systems increase transaction fees. Using crypto for international payments can reduce overall transaction fees. Most crypto trading platforms offer lower transaction fees. These fees are less than 1% of the transaction cost. They are a cost-effective alternative for international payments.
Crypto transactions are supported by blockchain technology and offer a decentralized environment for payment systems. The distributed ledger technology keeps a record of all blockchain transactions, making it more transparent. This system also ensures both parties have securely sent and received payments.
● Faster settlement times
Payment settlement can happen instantly using crypto assets. It offers a single path for sending and receiving payments without intermediaries. Traditional financial systems make us wait to complete payments during their operating hours. There are also delays in payment settlement due to intermediaries.
Crypto Future in Finance
Crypto assets will become a larger part of the financial world as they continue to acquire traction. Many traditional financial institutions are recognizing its potential to transform conventional systems. Additionally, some investment firms are offering crypto asset investment funds. Regulatory frameworks are emerging for crypto assets. This gives investors greater confidence to invest in this asset class.
Crypto assets are becoming a popular choice for investors to diversify their portfolios. These assets offer high returns for your investment. They will become a larger part of the financial world as they continue to gain traction. However, investors must be aware of the risks associated with crypto assets, such as volatility and the lack of regulations in certain markets.
Crypto assets have the potential to disrupt traditional financial systems that require intermediaries to check and verify transactions. As blockchain technology develops, more use cases will prevail and accept crypto as a viable financial system alternative. Crypto has the potential to transform conventional financial practices and can become a mainstream financial system in the long term future.
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Disclaimer: Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Each investor must do his/her own research or seek independent advice if necessary before initiating any transactions in crypto products and NFTs. The views, thoughts, and opinions expressed in the article belong solely to the author, and not to ZebPay or the author’s employer or other groups or individuals. ZebPay shall not be held liable for any acts or omissions, or losses incurred by the investors. ZebPay has not received any compensation in cash or kind for the above article and the article is provided “as is”, with no guarantee of completeness, accuracy, timeliness or of the results obtained from the use of this information.