A new technology has been steadily revolutionizing money for many years without us being aware of its presence. This industry boasts of over $300 billion invested in the past decade and a total market worth $4.7 trillion. Two simple roadblocks are keeping us from understanding this industry and tapping into its potential to help us reach our financial goals.
First Roadblock: What we don’t know
The broad term for the new technology is “fintech”—financial technology. Approximately 63% of us have never heard the term. Another 21% know the term but cannot define or explain it. Only 16% are even moderately conversant in the topic. Almost no one qualifies as a real expert because the technology is new and rapidly changing. Yet, embracing this massive technology is key to a solid financial future. We can start by simply identifying a few basic terms and moving ourselves out of the bottom 63%.
Here they are:
Fintech. Financial Technology.
The broad term referring to an innovative reconstruction of the financial industry, using data and digital. Fintech eliminates check books, cash and paper ledgers of any kind.
A shared, immutable ledger that uses cryptography and code to record transactions and track assets. It is the underlying technology of digital currencies, like bitcoin. Blockchain systems are nearly impossible to hack so data cannot be stolen or captured.
A totally virtual, digital currency on the blockchain, which can be used like paper currency to pay for necessities.
A new and advanced WEB experience. The first was WEB 1.0 which was “read only” and did not allow any interaction. Then WEB 2.0 introduced “read and write” (think FaceBook) where readers can post responses. Now WEB 3.0 introduces the ability to create and own digital assets. WEB 3.0 participants (such as gamers) use blockchain technology to create new digital assets with ownership that can be verified.
A universe where real and virtual can be lived as one. Many well-known brands are moving into this space, like Facebook, Microsoft, Louis Vitton, and many more.
A contract built on the blockchain that directly connects seller with buyer and eliminates the cost and time delays caused by the traditional middleman. These contracts are irreversible, trackable, self-enforcing.
Foreign Exchange. Trading based on the fluctuations in currency exchange rates, which is attracting investors just like the traditional stock market.
Knowing just this much – seeing these terms all together in one place with a cursory description, puts you ahead of 63% of the population. Further research on Google or YouTube will take you to a place of knowledge that will grant you an easy detour around the first roadblock and will prepare you to deal with the second one.
Second Roadblock: What THEY don’t know.
“They” are the financial professionals and advisors that we’ve trusted for years to provide insight, information and guidance as we make financial decisions. Most seasoned, trained, certified experts have not been taught anything about the new financial world, and are in fact discouraged from studying it.
I learned of this situation personally in 2017 when I told my husband about the cryptocurrency account that I opened. He is one of those financial professionals. His credentials include having a Graduate Banking Degree from the University of Virginia and insurance licenses in all 50 states. He is a registered securities principle and Chartered Retirement Planning Counselor. He worked in banking, insurance and securities. When I explained what I had learned about the new money—cryptocurrency—he responded with two statements that I’ll never forget.
First, he said, “That makes sense.” Wow! I was shocked. My financial wisdom rarely impressed him (given his extensive financial background and training). But I had joined a community of people who were exploring innovative financial solutions, and I had learned well. His next statement was most revealing:
“That’s what they didn’t want me to know.”
He was referring to the banks where he had worked. All of his training had been tailored to benefit the institutions. And he was not alone. Most tax accountants and investment advisors know very little about the $4.7 trillion, global market described in the 7 terms listed above. They know how to use traditional bank, stock market, insurance and real estate investments to help clients and benefit the institutions who pay their salaries.
But when bad things begin to happen – inflation runs amuck, the stock market is in decline and banks quit paying interest – they don’t know what to do, so they just keep peddling the same stuff harder. They begin to believe that “losing less than the rest of the market” is a win. But few of them can in good conscience recommend anything new because they have not studied it and are not qualified to lead us in that direction. Which brings us back to the question:
How do we get around the roadblock of “What they don’t know?”
Success came by getting in a community and joining other pilgrims on the journey. Following fintech geeks who did great research and then following up with my own due diligence. I engaged by dipping my toe in the water, never risking more than I could afford to lose. Over time I gained knowledge and confidence. I’m glad for the lessons I’ve learned, the fabulous people gathered in my circle of associates. But the most treasured benefit is the love I have for the person I’ve become in the process – adventurous, fun and free!
I encourage everyone to jump in and learn. Find a community of professionals who are using their expertise in traditional finances as a springboard for understanding the new economy. Money today needs to operate in an environment that is tech based. So, embark on a grand adventure with your money, and become the confident person you want to be.
Find more from Gail here.