Fintech: A Great Opportunity for Building Wealth
The financial technology industry is poised to breach the $332.5 billion mark by 2028 growing at a CAGR of 19.8% from 2022.
The phenomenal growth of the fintech industry at a global scale has turned a lot of heads over the last couple of years. 2021 was one of the best years in history in fintech investment and as we inch closer to 2023, it is important to take note of this burgeoning industry and what it can mean for you financially.
Fintech investment totaled $210 billion in 2021 according to a report by KPMG. The year also saw an unprecedented rise in crypto and blockchain markets with crypto exchanges like FTX raising billions. However, 2022 was a roller coaster ride when it comes to cryptocurrency. There was a major fallout and the prices plummeted.
Nevertheless, cryptocurrencies are here to stay thanks to non-fungible tokens (NFTs), play-to-earn, and decentralized finance – Defi. The point here is that investing in fintech will have its own risks and there are areas where you should be extremely careful, but in general the numbers should indicate the positives and you should gear up to invest in fintech ETFs.
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Customer experience is one of the areas where fintech companies have been laying a lot of focus lately and it is yielding some results in terms of spiking up interest in fintech stocks. Core banking functions are better, easier, and more user-friendly now, thanks to fintech. The buy-bow-pay-later (BNPL) industry has also shown great promise in the last couple of years. The BNPL industry is laden with risk if you think about it – it encourages overspending and it depends on positive financial behavior from the users. Things can go south very easily with both BNPL and Crypto, but they do not, and if you have deep pockets, these verticals can make you buckets full of cash.
With the fall of crypto, the rise of NFTs, the impending recession in the US, and the serious economic crises across Europe with a war raging, investors have become more and more cautious in 2022 than they were in 2021. A lot of different aspects are coming into play. The situation is such that businesses are operating under the threat that venture capital funds might get withdrawn until things are more stable.
A report by KPMG claims that there will be increased interest in cybersecurity automation in 2023, and although investments in cryptocurrencies will stay slow, they will be focused on infrastructure. Stability, security, and infrastructure are things investors will be looking for in fintech companies. VCs will be more interested in B2B and data-driven solutions.
There is definitely an enhanced amount of cautiousness as far as fintech in 2023 goes. This cautiousness is only expected with increasing interest rates and the US government trying desperately to combat inflation. At this point, it is better to be focused, knowledgeable, and aware when you make your investments in fintech.
According to a report by Forbes, the areas that are quite promising notwithstanding the general downward trends are embedded finance, alternative finance, blockchain, and environmental initiatives.
Top 6 Incredible Applications Of Quantum Computing
Far from commercially feasible, but more than possible, one day quantum computing will transform reality.
We have seen exponential growth in computing power over the past two decades. From bulky, sluggish computers to handheld and ultra-fast computing devices, namely smartphones, the technology and capabilities of hardware have come a long way. Now, we have surpassed our own innovation with quantum computing. Quantum computers are capable of handling complex problems with ease that may exceed the capabilities of modern digital computers or take years to solve.
Recently, Google made headlines by announcing an achievement in quantum computing supremacy. IBM also made a buzz about their supercomputer being blazingly fast. The power and performance of quantum computers are impressive, but that doesn’t mean existing software will run incredibly fast on them. Quantum computers work differently and are able to solve certain types of problems really fast.
Have you ever wondered what these machines actually do and what their uses are? In this article, we’ll discuss 6 incredible uses of quantum computing in different fields.
1. Weather Forecasting
Weather affects nearly 30 percent of the United States GDP ($6 trillion) directly or indirectly, according to Rodney F. Weiher, an NOAA chief economist. A better weather forecast can provide more time to avoid disasters which can immensely benefit many sectors like crops, transportation, retail, and many other businesses.
This has been a long-time goal of scientists but too many variables are making simulations lengthy which a classic computer cannot handle. According to quantum researcher Seth Lloyd, it would take classical computers longer to simulate an analysis than an actual weather event.
Hartmut Neven, director of engineering at Google noted that quantum computers are capable enough to build better climate models. These models then can be used to simulate different conditions for accurate future warnings and will give a lot of time to take cover. The Met Office, the United Kingdom’s national weather service, is already developing such a system.
2. Artificial Intelligence
It is said that AI will be to the 21st century what electricity was to the 20th century. AI works by learning from experience and becomes more accurate over time. The output is based on an enumeration of several possible options. These choices can be a huge number, so quantum computing is needed for an AI to become truly intelligent.
Aerospace company Lockheed Martin plans to use its D-Wave quantum computer to test complex autopilot software, which cannot be handled by current computers. Google is working on software that uses quantum computers to distinguish cars from landmarks. We are already at the point where AI is creating more AI.
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3. Molecular Modeling
Chemical reactions create highly entangled quantum superposition states in nature. Quantum chemistry is so complex that existing computers cannot analyze it. Ordinary computers can only analyze simple molecules.
Only a quantum computer is capable of easily evaluating complex molecules. Google has already simulated the energy of hydrogen molecules with the help of quantum computers. We can apply this technology to make more efficient products, from solar panels to medicines and fertilizers. Fertilizer production uses two percent of global energy production. More efficient methods of production will save on energy.
4. Cryptography
Most of the security algorithms in those days are based on the difficulty of dividing large numbers into prime numbers. Digital computers take an immense amount of time to search through every possible factor which makes cracking the code impractical and a lot more expensive.
Quantum computers can handle these factoring more efficiently. In the upcoming time, current security methods will become obsolete. New cryptography methods are under development. In August 2015, the National Security Agency introduced a cryptography method to resist quantum computers. In April 2016, the National Institute of Standards and Technology introduced a quantum computer-resistant algorithm.
5. Particle Physics
Researchers are already taking advantage of quantum computing as the models of particles are very complex. The numerical simulation requires a vast amount of computing time. Researchers of the Institute for Quantum Optics and Quantum Information and the University of Innsbruck used a programmable quantum computer to simulate a numerical simulation. The team used a simple quantum computer to simulate ions performing logical operations. The results were more accurate compared to the actual experiments.
Theoretical physicist Peter Zollar stated that we can’t replace the new results with the original ones done in particle colliders. But we can use this quantum simulation to understand the experiments better.
6. Finances
The modern market is one of the most complex systems in existence. Although we have developed highly sophisticated tools to run the system, there is one drawback, we cannot run experiments like in other fields.
The advantage of using quantum computers in finance could be to aid in many financial tasks such as arbitrage, which may require a lot of path-dependent steps. The number of possibilities can easily exceed the capacity of modern digital computers.
Banks, cyber security firms, aerospace companies, pharmaceuticals, everyone is looking to take advantage of quantum computing. Investors are scuffling to enter the quantum computing ecosystem. We have seen many incredible uses of quantum computing to date, but many of them are still unexplored. As hardware capabilities increase, we will see new opportunities being created.
EU Strikes a Deal with Hungary Freeing Up Funds for Ukraine
Hungarian Prime Minister Viktor Orbān uses tactical vetoes to get the EU to release partial payouts and pandemic relief funds.
Hungary has been out of the EU’s good books owing to its democratic backsliding over the last decade. The situation kept getting worse to the point where the European Commission proposed a funding freeze worth €7.5 billion in September 2022. Hungary was about to lose that entire amount along with €5.8 billion that the country was about to receive by 2026.
Prime Minister Viktor Orbān who has been at the center of this struggle between the Hungarian nation and the European Union gambled his vetoes to change the situation somewhat in their favor.
The European Commission has allocated funds worth €18 billion for Ukraine but it could not release the funds without Hungary’s approval. It was getting a bit embarrassing for the commission since they had pledged the money weeks ago. The EU had started crafting a plan B to release the funds but it involved bypassing Hungary. That meant Ukraine would receive the funds with approval from 26 individual nations and not the EU as a whole. While this would have aided Ukraine, it would also weaken the EU’s united front against Russian aggression.
So, it was in everyone’s best interest that Hungary and the EU reached an agreement and they did it on Monday night. In the deal, Hungary got the EU to lower the funding freeze by €1.2 billion. The EU also agreed to release the funds allotted for pandemic relief upon Hungary’s fulfillment of certain requirements.
The deal was struck at a meeting of EU ambassadors on Monday evening and it will be written down and formalized by Wednesday. This deal definitely brings some economic relief to the war stricken Ukrainians but only time will tell if it will do any real good for Hungary. The country is still losing €6.3 billion and the pandemic relief fund will be released only if Hungary manages to implement 27 anti-corruption and judicial independence reforms. The progress in that regard so far hasn’t been promising.
The deal that was struck on Monday was pushed by two deadlines. On one hand, the EU had until 19th December to decide whether to go forward with the funding freeze and on the other hand, Hungary needed to get their pandemic-recovery plans by a majority of EU countries by the end of the year or lose 70% of that €5.8 billion.
The decision wasn’t unanimous and compromises were made. Netherlands and Sweden were in favor of freezing the entirety of 7 billion euros, whereas Germany and France wanted to ensure that the released funds are proportionate with the amount of progress made towards irradicating political corruption and the humanitarian crises.
The other issue that pushed the deal forward was the European Commission’s desire to instate minimum corporate tax rates across Europe. The establishment of the reformed tax policies needed Hungary’s approval and not being able to push this forward would have resulted in a loss of face for the EU.
A lot of things came together to make this deal possible. It will be interesting to observe how the relationship between Hungary and the EU moves forward from this point.
