Friday, July 19, 2024

Crypto Finance

Crypto finance will enable new business models and organizational capabilities that can not only change the way we conduct financial transactions, but also redefine the architecture of the financial services sector and other related financial institutions. It will also change the way financial services companies interact with corporate clients and with each other.DeFi (decentralised finance), built on top of a distributed network of nodes (not corporations), extends Satoshi Nakamoto’s concept of peer-to-peer (P2P) electronic cash to lending, trading, investing, and managing risk. These innovations are possible thanks to a breakthrough technology called smart contracts. A smart contract is an immutable, self-executing program. A blockchain such as Algorand or Ethereum allow smart contracts to be enabled. It allows individuals to transact, do business and create value. It is a trust less and P2P way to set up the legal framework of a deal without the need for traditional intermediaries and gatekeepers.Web 3.0 was developed to address the limitations of Web 2.0.  Web 3.0 is built on top of blockchain networks that enable us to create, move, and manage digital goods, and interact with them via decentralized applications (also known as dapps).Crypto finance is still very much in its infancy. However, the trend towards more and more automation through digital services are clear. AI, improved chat bots, fintech are very much pulling in the same direction as crypto-base initiatives seeking to provide decentralised alternatives to traditional financial services. These new breed of services are typically faster, more secure and use decentralised sources of funding. One of the major goals of crypto finance has been to break the monopoly of traditional funders such as banks and pension funds.

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