FinTech 101 | Beginner’s Guide to Cryptocurrency

Technology has been altering our daily lives in many different ways - the way we work, the way we live and related to one another. It is continuously transforming humankind to another level and it is almost impossible to think of living our lives otherwise.

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The world has experienced three industrial revolutions prior and currently, we are in the fourth industrial revolution can be described as cyber-physical systems revolving more around technologies such as; fintech, blockchain, cybersecurity, artificial intelligence and much more!

Hong Kong is one of the leading financial hubs in the world and Hong Kong’s innovation and technology sector together with Shenzhen and Guangzhou ranks the world’s second-largest as per Global Innovation Index 2020. Hence, the application and adaptation of the technology (biotechnology, artificial intelligence, smart city and financial technologies (fintech)) in Hong Kong is quite high, especially for fintech.

What is FinTech?

FinTech is essentially a combination of Financial Technology that is challenging the traditional route of financial methods and delivery of services. Its union aims to create efficient solutions and processes via software, algorithms for computers and smartphones.

Nowadays, more and more customers and business owners have the need for ‘instant.' FinTech precisely aids in accelerating and streamlining processes that took days, weeks and months such as; sending international money transfers.

Segments of FinTech industry

The 4 major segments of Fintechs are; Finance, Asset Management, Payments and others. In this blog, we will be covering fintech application for ‘Payments’ - blockchain and cryptocurrency.

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What is Cryptocurrency?

Cryptocurrency is a digital currency secured by cryptography and based on blockchain technology. Blockchain status is getting higher in Hong Kong’s fintech market. 22 new companies in 2020 - 45% using blockchain technique for business intelligence solutions, 27% virtual assets transaction platform startups, 14% wealth management startups, remaining 14% trade finance, security token offering.

Tips on choosing a cryptocurrency

Bitcoin was the first cryptocurrency introduced was Bitcoin, hence, is one of the most famous ones. There are few other ones such as; Bitcoin Cash, Ethereum, Litecoin, Cardano, Polkadot, Stellar, Chainlink, Binance Coin, Tether and Monero.

• Be cautious - With the rise of more and more people investing into cryptocurrency, scamming and frauds have increased sharply. If it seems “too good to be true” then likely it is! So instead of trusting in one go, verify it by digging deeper into it!
• Do thorough research - Before you buy your first cryptocurrency and invest in it, ensure that you do lots of research! Read books, articles, forums, watch videos, join courses, attend events or seminars, network, etc but do your research. Research on different digital currencies, platforms to buy the digital currencies, digital wallets, etc. It is best to have a fair idea of all this before investing into cryptocurrency.
• Opt for higher security - There are 3 layers to cryptocurrency security - cryptocurrency (layer one), exchange platform (layer two) and wallet (layer three).  As a newbie, opt for a higher security option for all three layers.  
• Be mindful of fees & pairs - Cryptocurrency pairs are comparisons of costs between different cryptocurrencies (crypto-to-crypto trading pairs). For example, how much Bitcoin (BCH) equals in Bitcoin Cash (BCH) and how much BCH equals Ethereum (ETH). If you’re still new to cryptocurrencies then it’s best to be mindful of crypto pairing and the underlying fees while buying the cryptocurrency on an exchange platform.  
• Don’t put all your eggs in one basket - If you’re especially new to digital currency then it is best for you to not invest a whole lot of money in just one cryptocurrency. Firstly, invest at the bare minimum or what you can afford to lose and try investing in 2-3 types to figure out how it works, and then move to invest a bigger chunk of your money.

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How To Store Cryptocurrency Safely

• Offline Wallet - Also known as cold storage, there are 2 options; hardware and paper wallet to store the cryptocurrency. These wallets are not accessible through the internet and are one of the safest ways to store cryptocurrency with higher security. Some popular offline wallets are; Ledger and Trezor.
• Online Wallet - Also known as hot wallets work on internet-connected devices such as; phones, computers or tablets. These wallets are convenient, however, the security level for them is lower to store the cryptocurrency, they are better suited for short-term and smaller amounts of cryptocurrency. Some examples of online wallets are; MetaMask and imToken.

Fintech Market in Hong Kong

Hong Kong is in the 4th position as financial center globally and Hong Kong’s Fintech market is growing quickly. There are many fintech benefits in Hong Kong, below are some of them:

• Hong Kong has 3 out of 8 fintech unicorns that are valued over $1 billion.
• Up to 86% of the traditional banks are adopting fintech.
• Ranks in the top 5 for the world’s developed market for fintech adoption by consumers.
• Low and simple to understand taxes for businesses
• Anti-epidemic government funding available for businesses
• Approximately 1000 new jobs in the fintech market
• Founders of the fintech companies are from around the world including Hong Kong and Mainland China.

In addition, Hong Kong’s finance policy and cybersecurity are very well developed, hence, chances of cyber attack are low. According to the data, blockchain technology is continuing to improve and facilitate Hong Kong’s FinTech development.

Read Also: Fintech Career Guide for Graduates in Hong Kong

But the BIG question is: how do YOU even begin with Fintech?

The best way to begin in fintech is by taking a beginner-friendly fintech course or joining events and seminars relevant to fintech. Xccelerate offers a 6-week introductory fintech course in Hong Kong tailored for individuals without prior knowledge of the industry. The course covers the basics of various technologies in the fintech industry. The course will help you understand how the leading technological innovations can be applied in your role and the banking industry. You will go through a learning process involving a thorough industry analysis including some real-life examples of real products/businesses within the market.

Fintech Course in Hong Kong

Part-time Introduction to FinTech

Fintech Event in Hong Kong

The Future of Finance 1: Blockchain Technology and Crypto
Fintech: Transformation of Financial Services (SOLD OUT)

The Future of Finance 2: The Impact of Blockchain

The Future of Finance 3: How DeFi is Democratising the Financial World

Need more advice?

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