Is Bitcoin a fintech?

Yes — one of the factors that first propelled financial technology or fintech into the public
consciousness was the development and trading of cryptocurrencies, of which Bitcoin is
probably the best known. Bitcoin was also the first widely recognized application of
blockchain technology.

Bitcoin was created in 2008 and announced through a white paper that was published in a
forum online under the alias Satoshi Nakamoto. The Bitcoin network contained rules to
determine the validation of transactions on its blockchain ledger and the creation of currency
in the system.

Bitcoin employs a “proof of work” system, which involves “miners” solving complicated
puzzles. The mining process also creates new Bitcoins. The network is self-regulating and
makes sure that someone solves the puzzle and mines a block roughly every ten minutes. You
can buy Bitcoin from online exchanges like Coinbase, Kraken, or Poloniex, by setting up an
account and paying with your debit or credit card.

How will technology change money laundering prevention?

Obviously, technologies will continue to make money laundering and terrorist financing
prevention easier, but I think the latest scandals also show that it may not be enough. I am
betting on some major changes in the anti-money laundering "market" both from the
regulatory perspective - and conceptually, but I intend to write an actual normal separate
article on this, so will keep my thoughts for that.

what will change in our expectations for personal data privacy?

Everyone is betting on our increasing expectations for personal data privacy, especially after
GDPR took the EU and related markets by storm (sending aftershock waves all the way to
some states in the US already), but at the same time, more and more financial services rely on
us sharing more and more of our personal data with the service providers. How much exactly
will we be ready to forsake for a seamless access to the financial markets and funds?

An unexpected think piece by Will.I.Am made me wonder - would we be ready to share our
personal data for a compensation maybe?

I actually have the least comments on this last question, even if it seems to be the most
obvious one. For one, I think I am really primed by the Western culture (whatever that
is... :) ) - the service providers in Asia, for example, have a very different cultural and
political context in which they deal with the related data privacy issues. Second - I am
starting to think we are all a bit hypocritical on the issue... We could easily switch to
encrypted Facebook Messenger messages, thus making it at least a bit harder to hack into our
important messages with otter memes (just me? okay then), but out of the friends I asked, the
total of zero are actually using it (despite at the same time claiming they all perceive data
privacy to be a virtue). We also get immediately irritated when we have to tick off cookies
policies on different websites, but none of us bother to read the privacy policies we sign on to
when buying a new service... Does this mean we don't really care about privacy as much as
we think? I will just leave this one here to ponder further... 

How and whether the central bank digital currencies will change the financial services
market?

Multiple central banks in the world have been researching the idea of issuing central bank
digital currencies (CBDC) and unless everything turns around, we should see the first
centralized digital coins in the upcoming decade. IMF has been preparing for this quite
seriously for the last couple of years, and China has already declared it is "aiming to be the
first country in the world to launch a digital currency".

The popularity of e-payments is by a large part determined by the convenience they offer
compared to traditional currencies - but if traditional currencies become digital, would that
change the segment of the e-payments industry - and, more broadly, the entire financial
market?

There are different models of CBDCs researched in the - and the response to this first
question depends on which model would be chosen by different countries or financial blocks.
Since I personally find this subject quite fascinating, I will spend a bit more time exploring
this here too.

There is much discussion around this, but it seems that CBDC could either be account- or
token-based Transactions in account-based CBDC would resemble today’s transactions
between commercial bank depositors, except accounts would be held in the central bank and
we would all login to our personal accounts at the central banks by using websites / apps /
other tools (either native to the central bank or provided by external businesses) to request
transfers of funds.

Token-based CBDC would be more complex - a transaction using token-based CBDC would
require external verification of the tokens and a network where they could operate.

As you may already guess, the main related questions to both of these models are related to
different degrees of anonymity (or lack of it) each model can offer and the role that central
banks would play in them.

The central banks could directly oversee and manage the CBDC or delegate roles to other
actors, such as commercial banks or e-payment institutions. For token-based CBDC, the
distribution and validation for the currency could either be in the hands of a centralised bank,
or, for example, the commercial banks could still circulate the digital tokens as they now do
for good old regular cash.

Similarly, the entire design and operation of personal accounts in the account-based CBDC,
their verification, related payment and customer services could be in the hands of central
banks - or central banks could delegate administering digital accounts we would all have in
central banks to private entities (for example, we could use private "wallets" provided by
selected service provider to access and manage our accounts in the central bank). There are
all sorts of variations in between that could differently affect the current landscape of
financial service providers and have all other sorts of implications. For example, in some
models, the central banks would have to adopt KYC and start implementing anti-money
laundering prevention to some extent...

Most likely, the central banks will not choose to turn around the market entirely by issuing
centralized CBDCs, as this could become a major blow to the financial market as we know it,
but CBDCs would definitely affect the current market players. They would have to adjust to
the new rules both technologically and by shaping a different business model... The
implications to the monetary policy and modern financial stability would also be far reaching.
For example, would the states provide unlimited deposit insurance for the funds of their
residents kept in the personal accounts in the central banks? If so, this would end up affecting
the entire deposit business model and so on.