In addition to price speculation, cryptocurrencies have opened a whole lot of opportunity for entrepreneurs through their open financial system.
From being decentralized, there have been major strides towards making blockchain a better open financial system. From the adoption of identity protocols for now, your customer (KYC) and anti-money laundering (AML), compliance to modular, and open-source tools, blockchain has been able to align with the traditional economic structures.
The sheer innovation opportunities that blockchain has offered for entrepreneurs is exciting. Also, there is the monetary sovereignty that comes with cryptocurrencies that also includes data privacy within the unbanked world.
Adoption of open finance
‘Open finance’ simply refers to the decentralized nature of cryptocurrencies/blockchain networks. It is increasingly becoming a darling for many entrepreneurs due to its interoperable nature of the system. Its core belief includes transparency, accessibility, financial inclusion, and standardization.
World Bank’s Global Findex report showed that more than 2 billion people around the world still have no access to bank services. Blockchain/cryptocurrencies could be a great opportunity for them.
Cryptocurrencies have made it easier for people to access transactions mechanism and data storage channels without involving intermediaries by creating new financial assets outside the traditional financial system which places banks at the heart of the system.
Bitcoin was the first cryptocurrency to be developed and since then other cryptocurrencies have been developed with emphasis to open financial tools. Cryptocurrencies are now being developed on open protocols and hybrid services offered commercial bodies.
Some of the open financial tools that are quickly gaining traction are blockchain lending services, security tokens, and decentralized trading markets.
It is normally difficult to employ a wholesale adoption of the open finance blockchain system. Rather, developers choose to develop hybrid blockchain ecosystems on the already existing business and financial models.
At the same time for open finance to prosper, the right infrastructure has to be provided. Financial institutions and regulators around the world are toiling very hard to ensure that the right infrastructure is in place as cryptocurrencies adoption gathers momentum.
For example, startups have found a new way to fund their projects through ICOs, IEOs, and STOs. However, without the right infrastructure, there can be a lot of fraud.
Standardization of the open financial ecosystem
The future of open financial system landscape is pegged on open protocols and hybrid financial services. For entrepreneurs, the adoption of open financial across the world which is rapidly replacing the traditional financial systems like banks presents exceptional opportunities. The whole system of the open financial system is completely reshaping the old financial model.
Countries are slowly transiting to cashless societies and cryptocurrencies provide the perfect solution.
The current rush by countries to come up with crypto regulations is a clear sign that governments have realized that cryptocurrencies are unstoppable and that they better do something before they are caught up in the shakeup. Almost every country is currently working on coming up with laws to regulate the use of cryptocurrencies.
With standardization across the board, the open financial ecosystem will be more applicable across countries.