Fintech about to dethrone traditional investments?

Gone are the days when investors had the choice between government bonds and bank shares. Today, a multitude of assets and derivative products such as CFDs are available. In recent years, there has been a growing interest in the fintech industry and cryptocurrencies over traditional assets. Point.

Sustained growth for fintech

The excitement around cryptocurrencies is not trivial. It reflects the success of an entire sector: fintech. After the 2000s and the rise of GAFA, this new sector aimed to revolutionize the traditional financial system.

The objective of fintech (contraction of financial technology) is to integrate new technologies to modernize the banking system and our relationship with the financial world. PayPal, for example, is considered one of the pioneers of the genre.

The term fintech brings together a wide range of projects: crowdfunding sites, peer-to-peer lending applications, mobile payment systems, online trading, cryptocurrencies and many more. Investments in the fintech sector during the first 6 months of 2018 reached nearly $60 billion. According to the report Fintech 2017 According to Statista, the sector’s growth rate will reach 20% over the next few years.

Democratization of markets thanks to fintech

Fintechs have greatly facilitated access to financial markets. Amateur or professional investors only have to download an online trading application like IG’s to invest via Contract for Difference (CFD) type products, for example. CFDs make it possible to invest with a leverage effect and therefore to minimize the capital invested.

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Another notable development linked to the advent of fintech: the increase in the number of investors in cryptocurrencies. While Bitcoin is undoubtedly the best-known cryptocurrency, there are nearly 2,000 others. Among the most important in terms of capitalization, we can mention Ethereum and Ripple. In the United States, Bitcoin is also qualified as a commodity just like gold or coffee for example.

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Can Bitcoin be compared to gold?

It may seem incongruous to compare gold, the safe haven par excellence, to Bitcoin, an asset with a highly volatile price. The chart below also highlights these differences in price amplitude.

If some do not hesitate to take the plunge, it seems wiser to consider the two investments as complementary. Gold and Bitcoin each have their pros and cons. This can be seen in the comparison below.

On the other hand, it is true that the two assets have common attributes, in particular the fact that their quantity is limited. Bitcoin can most certainly be called a safe haven for the cryptocurrency industry. It is therefore understandable why individual and institutional investors are interested in it, sometimes to the detriment of other more traditional categories such as currencies or equities.

Fintechs in France

As far as fintech is concerned, France is not to be outdone and the France FinTech association publishes its overview of the sector every year. In 2018, three companies from France also stood out among the top 100 best fintech established by the consulting firm KPMG: Lendix, +Simple and Shift Technology.

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Whether through the companies themselves or through assets like cryptocurrencies, investments in the sector should therefore continue to increase in 2019 and gain market share compared to traditional investments.

Read also: What to invest in 2020: the best financial tips

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