FinTech

The present-day financial system is being influenced by the rapid development of Fintech (financial technology), which comprises technologies created to improve and automate traditional forms of finance for businesses and consumers. The topic of Fintech as a financial disruptor is gaining popularity in [...] Read more.

The present-day financial system is being influenced by the rapid development of Fintech (financial technology), which comprises technologies created to improve and automate traditional forms of finance for businesses and consumers. The topic of Fintech as a financial disruptor is gaining popularity in line with the swift spread of digitalization across the banking industry, whereby this paper contributes to the field by presenting a novel bibliometric analysis of the academic literature related to Fintech as a financial disruptor. The analysis is based on metadata extracted from the Scopus database through the VOSviewer and Biblioshiny software. The bibliometric analysis of 363 documents identifies the most impactful sources of publication, keywords, authors, and most cited documents on the topic of Fintech as a financial disruptor. As our analysis demonstrates, the number of publications on the given topic is increasing, indicating both interest among academia and potential for future research. Full article

(This article belongs to the Special Issue Recent Development in Fintech)

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20 pages, 663 KiB

Open AccessArticle

Pravuil: Global Consensus for a United World

by David Cerezo Sánchez

FinTech 2022, 1(4), 325-344; https://doi.org/10.3390/fintech1040025 - 31 Oct 2022

Viewed by 1984

Abstract

The latest developments in blockchain technology have conceptualised very efficient consensus protocols that have not yet been able to overcome older technologies. This paper presents Pravuil, a robust, secure, and scalable consensus protocol for a permissionless blockchain suitable for deployment in an adversarial [...] Read more.

The latest developments in blockchain technology have conceptualised very efficient consensus protocols that have not yet been able to overcome older technologies. This paper presents Pravuil, a robust, secure, and scalable consensus protocol for a permissionless blockchain suitable for deployment in an adversarial environment such as the Internet. Using zero-knowledge authentication techniques, Pravuil circumvents previous shortcomings of other blockchains: Bitcoin’s limited adoption problem (as transaction demand grows, payment confirmation times grow much less than that of other PoW blockchains); higher transaction security at a lower cost; more decentralisation than other permissionless blockchains; impossibility of full decentralisation; the blockchain scalability trilemma (decentralisation, scalability, and security can be achieved simultaneously); and Sybil resistance for free implementation of the social optimum. Pravuil goes beyond the economic limits of Bitcoin and other PoW/PoS blockchains, leading to a more valuable and stable cryptocurrency. Full article

(This article belongs to the Special Issue Recent Development in Fintech)

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7 pages, 433 KiB

Open AccessCommunication

Models for Point-of-Sale (POS) Market Entry

by Pritham Pattamatta and Shaunak S. Dabadghao

FinTech 2022, 1(4), 318-324; https://doi.org/10.3390/fintech1040024 - 12 Oct 2022

Cited by 2 | Viewed by 4270

Abstract

Point of Sale (PoS) or Buy-Now-Pay-Later (BNPL) type financing has observed a strong rise in the last decade, and accounts for about 10% of the unsecured lending market in the USA. This market is largely covered by FinTechs, and traditional financial institutions are [...] Read more.

Point of Sale (PoS) or Buy-Now-Pay-Later (BNPL) type financing has observed a strong rise in the last decade, and accounts for about 10% of the unsecured lending market in the USA. This market is largely covered by FinTechs, and traditional financial institutions are beginning to demonstrate interest in entering this market. In this short communication, we identify why the POS market is attractive and what drives its growth, examine the market participants, and illustrate the various ways in which financial institutions can enter this market. Full article

(This article belongs to the Special Issue Recent Development in Fintech)

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8 pages, 1353 KiB

Open AccessCommunication

Non-Fungible Tokens (NFTs) and Cryptocurrencies: Efficiency and Comovements

by Éder Pereira, Paulo Ferreira and Derick Quintino

FinTech 2022, 1(4), 310-317; https://doi.org/10.3390/fintech1040023 - 2 Oct 2022

Cited by 5 | Viewed by 3413

Abstract

Non-fungible tokens (NFTs) are a type of digital record of ownership used in a unique way: ensuring authenticity and uniqueness. Due to these characteristics, NFTs have been used in several markets: games, arts, and sports, among others. In 2020, the volume of negotiations [...] Read more.

Non-fungible tokens (NFTs) are a type of digital record of ownership used in a unique way: ensuring authenticity and uniqueness. Due to these characteristics, NFTs have been used in several markets: games, arts, and sports, among others. In 2020, the volume of negotiations of the NFTs was about USD 200 million. Despite the strong interest of economic agents in operating with NFTs, there are still gaps in the literature, regarding their dynamics and price interrelation with other potentially related assets, which deserve to be studied. In this sense, the main purpose in this paper is to analyze the cross-correlation between NFTs and larger cryptocurrencies. To this end, our methodological approach is based on a Detrended Cross-Correlation Analysis correlation coefficient, with a sliding windows approach. Our main finding is that the cross-correlations are not significant, except for a few cryptocurrencies, with weak significance at some moments of time. We also carried out an analysis of the long-term memory of NFTs, which demonstrated the antipersistence of these assets, with results seemingly corroborating the market inefficiency hypothesis. Our results are particularly important for different classes of investors, due to the analysis on different time scales. Full article

(This article belongs to the Special Issue Recent Development in Fintech)

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18 pages, 365 KiB

Open AccessArticle

Choice between IEO and ICO: Speed vs. Liquidity vs. Risk

by Anton Miglo

FinTech 2022, 1(3), 276-293; https://doi.org/10.3390/fintech1030021 - 9 Sep 2022

Cited by 5 | Viewed by 3322

Abstract

This paper analyzes a financing problem for an innovative firm that is considering launching a web-based platform. The model developed in the paper is the first one that analyzes an entrepreneur’s choice between initial exchange offering (IEO) and initial coin offering (ICO). Compared [...] Read more.

This paper analyzes a financing problem for an innovative firm that is considering launching a web-based platform. The model developed in the paper is the first one that analyzes an entrepreneur’s choice between initial exchange offering (IEO) and initial coin offering (ICO). Compared to ICO, under IEO the firm is subject to screening by an exchange that reduces the risk of investment in tokens; also the firm receives access to a larger set of potential investors; finally tokens become listed on an exchange faster. The paper argues that IEO is a better option for the firm if: (1) the investment size is relatively large; (2) the extent of moral hazard problems faced by the firm is relatively large; (3) the degree of investors’ impatience is relatively small. Furthermore, a non-linear relationship between firm quality and its financing choice is found. Most of these predictions are new and have not been tested so far. Full article

(This article belongs to the Special Issue Recent Development in Fintech)

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10 pages, 536 KiB

Open AccessCommunication

Some Very Simple Economics of Web3 and the Metaverse

by Paul P. Momtaz

FinTech 2022, 1(3), 225-234; https://doi.org/10.3390/fintech1030018 - 1 Jul 2022

Cited by 27 | Viewed by 6379

Abstract

The Metaverse refers to a shared vision among technology entrepreneurs of a three-dimensional virtual world, an embodied internet with humans and the physical world in it. As such, the Metaverse is thought to expand the domain of human activity by overcoming spatial, temporal, [...] Read more.

The Metaverse refers to a shared vision among technology entrepreneurs of a three-dimensional virtual world, an embodied internet with humans and the physical world in it. As such, the Metaverse is thought to expand the domain of human activity by overcoming spatial, temporal, and resource-related constraints imposed by nature. The technological infrastructure of the Metaverse, i.e., Web3, consists of blockchain technology, smart contracts, and Non-Fungible Tokens (NFTs), which reduce transaction and agency costs, and enable trustless social and economic interactions thanks to decentralized consensus mechanisms. The emerging Metaverse may give rise to new products and services, new job profiles, and new business models. In this brief note, I assess the promises and challenges of the Metaverse, offer a first empirical glimpse at the emerging Metaverse economy, and discuss some simple Metaverse economics that revolve around building and operating the Metaverse. Full article

(This article belongs to the Special Issue Recent Development in Fintech)

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9 pages, 824 KiB

Open AccessCommunication

The Non-Fungible Token (NFT) Market and Its Relationship with Bitcoin and Ethereum

by Lennart Ante

FinTech 2022, 1(3), 216-224; https://doi.org/10.3390/fintech1030017 - 29 Jun 2022

Cited by 103 | Viewed by 17474

Abstract

Non-fungible tokens (NFTs) are transferrable rights to digital assets, such as art, in-game items, collectables, or music. The phenomenon and its markets have grown significantly since early 2021. We investigate the interrelationships between NFT sales, NFT users (unique active blockchain wallets), and the [...] Read more.

Non-fungible tokens (NFTs) are transferrable rights to digital assets, such as art, in-game items, collectables, or music. The phenomenon and its markets have grown significantly since early 2021. We investigate the interrelationships between NFT sales, NFT users (unique active blockchain wallets), and the pricing of Bitcoin (BTC) and Ether (ETH). Using daily data between January 2018 and April 2021, we show that a Bitcoin price shock triggers an increase in NFT sales. Also, Ether price shocks reduce the number of active NFT wallets. The results suggest that (larger) cryptocurrency markets affect the growth and development of the (smaller) NFT market, but there is no reverse effect. Full article

(This article belongs to the Special Issue Recent Development in Fintech)

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16 pages, 1981 KiB

Open AccessArticle

Modeling and Forecasting Cryptocurrency Closing Prices with Rao Algorithm-Based Artificial Neural Networks: A Machine Learning Approach

by Sanjib Kumar Nayak, Sarat Chandra Nayak and Subhranginee Das

FinTech 2022, 1(1), 47-62; https://doi.org/10.3390/fintech1010004 - 30 Dec 2021

Cited by 8 | Viewed by 4301

Abstract

Artificial neural networks (ANNs) are suitable procedures for predicting financial time series (FTS). Cryptocurrencies are good investment assets; therefore, the effective prediction of cryptocurrencies has become a trending area of research. Capturing inherent uncertainties associated with cryptocurrency FTS with conventional methods is difficult. [...] Read more.

Artificial neural networks (ANNs) are suitable procedures for predicting financial time series (FTS). Cryptocurrencies are good investment assets; therefore, the effective prediction of cryptocurrencies has become a trending area of research. Capturing inherent uncertainties associated with cryptocurrency FTS with conventional methods is difficult. Though ANNs are the better alternative, fixing the optimal parameters of ANNs is a tedious job. This article develops a hybrid ANN through Rao algorithm (RA + ANN) for the effective prediction of six popular cryptocurrencies such as Bitcoin, Litecoin, Ethereum, CMC 200, Tether, and Ripple. Six comparative models such as GA + ANN, PSO + ANN, MLP, SVM, LSE, and ARIMA are developed and trained in a similar way. All these models are evaluated through the mean absolute percentage of error (MAPE) and average relative variance (ARV) metrics. It is found that the proposed RA + ANN generated the lowest MAPE and ARV values, statistically different as compared with existing methods mentioned above, and hence can be recommended as a potential financial instrument for predicting cryptocurrencies. Full article

(This article belongs to the Special Issue Recent Development in Fintech)

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Review

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15 pages, 984 KiB

Open AccessReview

A Comparative Study of the Design Frameworks of the Ghanaian and Nigerian Central Banks’ Digital Currencies (CBDC)

by Kwami Ahiabenu

FinTech 2022, 1(3), 235-249; https://doi.org/10.3390/fintech1030019 - 19 Aug 2022

Cited by 6 | Viewed by 5022

Abstract

This paper discusses critical considerations in the design of central bank digital currency (CBDC) in West Africa through a comparative case study of Ghana’s (eCedi) and Nigeria’s (eNaira) design frameworks. This paper analyses CBDC design options framed through context (digital payment landscape and [...] Read more.

This paper discusses critical considerations in the design of central bank digital currency (CBDC) in West Africa through a comparative case study of Ghana’s (eCedi) and Nigeria’s (eNaira) design frameworks. This paper analyses CBDC design options framed through context (digital payment landscape and CBDC objectives), technical aspects (design principles, architecture, risks), use cases, and deployment plans. This study conducted a thematic analysis of official CBDC design documents to identify similarities, differences, and patterns. The results indicate more similarities between the eCedi and eNaira designs than differences. Differences were observed in the CBDC deployment context, risk profiles, and plans. Surprisingly, neither country has articulated the detailed legal and regulatory environments for CBDC. This paper highlights the use of CBDC designs to promote citizens’ welfare by using financially inclusive policy goals within central banking’s welfare functions, thereby extending their traditional role. Policymakers should focus on adaptive legal and policy design outlooks to address uncertainties associated with CBDC. This paper is important because it is one of the first to contribute to a detailed comparison of Ghana and Nigeria’s CBDC design frameworks. Full article

(This article belongs to the Special Issue Recent Development in Fintech)

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