Friday, June 13, 2025
Invoice Finance News - Magazine
Advertisement
  • Home
  • About
  • Podcast
    • Summaries
    • Articles
  • Invoice Finance
    • Basics
      • What is Invoice Finance?
      • What is Reverse Factoring?
      • What are Trade Receivables?
      • What is the Cash Conversion Cycle?
      • What is Days Inventory Outstanding?
      • What is Days Sales Outstanding?
      • What is Days Payable Outstanding?
    • Advanced
      • Invoice Validation and Fraud Detection
      • Reasons Why Invoice Finance is Better than a Bank Loan
      • How to Choose the Right Factoring Firm for Your Business
      • A Closer Look at Factoring Agreements
      • What is Trade Receivables Securitisation?
      • Breakdown of the Costs for Factoring
    • Factoring
      • Why Companies Use Invoice Factoring
      • What Companies are Suitable for Invoice Factoring?
      • Factoring and Invoice Discounting
      • How Factoring Works
      • Asset Based Lending
      • Is Factoring Right for Your Company?
      • Accounting for Factoring
      • How a Company Enters into a Factoring Agreement
      • The Costs Involved in Factoring
      • Changing Factoring Company
      • The Relationship Between the Factoring Company and the Debtor
      • Legal Aspects of a Factoring Company Pursuing Payment Through the Courts
      • Factoring in the Construction Industry
    • Fraud
      • Types of Invoice Fraud
      • How to Combat Invoice Fraud
    • E-Invoicing
      • Legal Status of Electronic Invoicing
      • The Benefits of E-Invoicing
      • Implementing an E-Invoice System
      • E-Invoicing Adoption in Mexico and The Rest of the World
  • Brokers
    • UK Brokerage Firms
  • Factoring Firms
    • Europe
      • UK
      • France
      • Germany
      • Italy
      • Spain
      • Holland
    • North America
      • USA
      • Canada
    • Australasia
      • Australia
      • New Zealand
  • Hi-Tech
    • Digital Platform/IT/Software Providers
    • UK Fintech
    • Articles
      • Enhancing Fintech Interoperability: Digitalizing Trade Documents for Efficiency and Security
      • The 7 Types of AI and Their Implications for the Future
      • Transforming Trade Finance: The Role of AI
      • The Different Programming Languages Used in Fintech Companies and Financial Institutions
      • UK and US Authorities Intervene in AI Sector
      • Web3 Applications and the Future of Trade Finance
      • What is Web 3?
      • What Can Fintech do for You?
      • What is Fintech?
      • Tokenisation of Finance
      • Payment Services in the Invoice Finance Sector
      • What is ChatGPT and Why the Fuss?
  • Rating Agencies
  • Securitisation
    • Deal Arrangers
    • Book Runners
    • Articles
      • The Roles of Deal Arrangers and Book Runners in Securitization
      • What is Trade Receivables Securitisation?
      • The Appeal of Trade Receivables Securitisation
      • Risk Mitigation for Trade Receivables Securitisation
  • Legal
    • Law Firms
    • Articles
      • A Guide to Accounts Receivable Purchase Agreements and Invoice Discounting Agreements
      • The Challenges of KYC and AML Checks
      • What is The Model Law on Electronic Transferable Records (MLETR)?
      • Snapshot of Factoring Legal Schemes in England and Wales
      • How are UK Factoring Firms Regulated?
      • What is ISO20022 and Why is it Important?
  • Rates
  • Economy
    • Economic Indicators
    • Articles
      • The Collapse of the Russian Rouble: An Historical Analysis and Current Implications
      • The Current State of the UK Economy
      • Economic Forecast for the UK in 2023
      • Economic News for 2022
      • Financial Crisis or Not?
      • Credit Suisse Bailout
  • Credit Insurers
    • Credit Insurers
    • Articles
      • Credit Insurance Legal Aspects
      • Credit Insurance in Trade Receivables Financing
      • The Benefits of Credit Insurance in Invoice Finance
      • Eligibility Requirements for Capital Relief by Using Credit Insurance
      • What are Export Credits and Country Risk Classifications?
      • How the War in Ukraine Affects the Price of Credit Insurance for Trade Finance
  • Associations
  • ESG
    • ESG Articles
    • ESG Resources
  • Crypto Finance
    • Ripple (XRP) Wins Latest Battle with SEC
    • UK Passes Financial Services and Markets Act 2023
    • Latest about the UK Regulatory Proposal for Crypto Assets
    • How will MiCA (Markets in Crypto Assets) Regulation Affect Trade Finance and the Banking System?
    • Markets in Crypto Act (MiCA) Becomes EU Law
    • An Introduction to EU’s Markets in Crypto-Assets (MiCA) Law 
    • Supply Chains and Blockchain Technology
    • The DeFi Revolution
    • How DeFi Fulfils the Functions of Finance
    • Taxonomy of Crypto Assets
    • Crypto Currencies
  • Interviews
    • Interview with Tradeshift
    • Interview with Kyriba
    • Interview with Orbian
    • Interview with Crossflow
    • Interview with Dancerace
    • Interview with BlackLine
    • Interview with Novicap Part One
    • Interview with Novicap Part Two
    • Interview with Karl Page
    • Interview with A P Trade Finance
    • Interview with vabble
  • Archive
    • Archive 2022
  • Videos
    • Videos
  • Contact Us
No Result
View All Result
  • Home
  • About
  • Podcast
    • Summaries
    • Articles
  • Invoice Finance
    • Basics
      • What is Invoice Finance?
      • What is Reverse Factoring?
      • What are Trade Receivables?
      • What is the Cash Conversion Cycle?
      • What is Days Inventory Outstanding?
      • What is Days Sales Outstanding?
      • What is Days Payable Outstanding?
    • Advanced
      • Invoice Validation and Fraud Detection
      • Reasons Why Invoice Finance is Better than a Bank Loan
      • How to Choose the Right Factoring Firm for Your Business
      • A Closer Look at Factoring Agreements
      • What is Trade Receivables Securitisation?
      • Breakdown of the Costs for Factoring
    • Factoring
      • Why Companies Use Invoice Factoring
      • What Companies are Suitable for Invoice Factoring?
      • Factoring and Invoice Discounting
      • How Factoring Works
      • Asset Based Lending
      • Is Factoring Right for Your Company?
      • Accounting for Factoring
      • How a Company Enters into a Factoring Agreement
      • The Costs Involved in Factoring
      • Changing Factoring Company
      • The Relationship Between the Factoring Company and the Debtor
      • Legal Aspects of a Factoring Company Pursuing Payment Through the Courts
      • Factoring in the Construction Industry
    • Fraud
      • Types of Invoice Fraud
      • How to Combat Invoice Fraud
    • E-Invoicing
      • Legal Status of Electronic Invoicing
      • The Benefits of E-Invoicing
      • Implementing an E-Invoice System
      • E-Invoicing Adoption in Mexico and The Rest of the World
  • Brokers
    • UK Brokerage Firms
  • Factoring Firms
    • Europe
      • UK
      • France
      • Germany
      • Italy
      • Spain
      • Holland
    • North America
      • USA
      • Canada
    • Australasia
      • Australia
      • New Zealand
  • Hi-Tech
    • Digital Platform/IT/Software Providers
    • UK Fintech
    • Articles
      • Enhancing Fintech Interoperability: Digitalizing Trade Documents for Efficiency and Security
      • The 7 Types of AI and Their Implications for the Future
      • Transforming Trade Finance: The Role of AI
      • The Different Programming Languages Used in Fintech Companies and Financial Institutions
      • UK and US Authorities Intervene in AI Sector
      • Web3 Applications and the Future of Trade Finance
      • What is Web 3?
      • What Can Fintech do for You?
      • What is Fintech?
      • Tokenisation of Finance
      • Payment Services in the Invoice Finance Sector
      • What is ChatGPT and Why the Fuss?
  • Rating Agencies
  • Securitisation
    • Deal Arrangers
    • Book Runners
    • Articles
      • The Roles of Deal Arrangers and Book Runners in Securitization
      • What is Trade Receivables Securitisation?
      • The Appeal of Trade Receivables Securitisation
      • Risk Mitigation for Trade Receivables Securitisation
  • Legal
    • Law Firms
    • Articles
      • A Guide to Accounts Receivable Purchase Agreements and Invoice Discounting Agreements
      • The Challenges of KYC and AML Checks
      • What is The Model Law on Electronic Transferable Records (MLETR)?
      • Snapshot of Factoring Legal Schemes in England and Wales
      • How are UK Factoring Firms Regulated?
      • What is ISO20022 and Why is it Important?
  • Rates
  • Economy
    • Economic Indicators
    • Articles
      • The Collapse of the Russian Rouble: An Historical Analysis and Current Implications
      • The Current State of the UK Economy
      • Economic Forecast for the UK in 2023
      • Economic News for 2022
      • Financial Crisis or Not?
      • Credit Suisse Bailout
  • Credit Insurers
    • Credit Insurers
    • Articles
      • Credit Insurance Legal Aspects
      • Credit Insurance in Trade Receivables Financing
      • The Benefits of Credit Insurance in Invoice Finance
      • Eligibility Requirements for Capital Relief by Using Credit Insurance
      • What are Export Credits and Country Risk Classifications?
      • How the War in Ukraine Affects the Price of Credit Insurance for Trade Finance
  • Associations
  • ESG
    • ESG Articles
    • ESG Resources
  • Crypto Finance
    • Ripple (XRP) Wins Latest Battle with SEC
    • UK Passes Financial Services and Markets Act 2023
    • Latest about the UK Regulatory Proposal for Crypto Assets
    • How will MiCA (Markets in Crypto Assets) Regulation Affect Trade Finance and the Banking System?
    • Markets in Crypto Act (MiCA) Becomes EU Law
    • An Introduction to EU’s Markets in Crypto-Assets (MiCA) Law 
    • Supply Chains and Blockchain Technology
    • The DeFi Revolution
    • How DeFi Fulfils the Functions of Finance
    • Taxonomy of Crypto Assets
    • Crypto Currencies
  • Interviews
    • Interview with Tradeshift
    • Interview with Kyriba
    • Interview with Orbian
    • Interview with Crossflow
    • Interview with Dancerace
    • Interview with BlackLine
    • Interview with Novicap Part One
    • Interview with Novicap Part Two
    • Interview with Karl Page
    • Interview with A P Trade Finance
    • Interview with vabble
  • Archive
    • Archive 2022
  • Videos
    • Videos
  • Contact Us
No Result
View All Result
Invoice Finance News - Magazine
No Result
View All Result
Home Crypto Finance

The DeFi Revolution

John Goodden by John Goodden
January 25, 2023
in Crypto Finance
0
The DeFi Revolution
31
VIEWS
Share on FacebookShare on TwitterShare on Linkedin
The DeFi Revolution
Invoice Finance
The DeFi Revolution
Loading
00:00 / 7:29
RSS Feed
Share
Link
Embed

Download file | Play in new window | Duration: 7:29 | Recorded on December 27, 2022

This is the first in a series of articles on decentralised finance (also known as DeFi), a new revolution that has taken the financial services sector by storm. The financial services sector is about to change in every aspect, from how we move and store value to how we access credit, invest, trade, transact, and insure against risk. 

DeFi 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, as well as change the way financial services companies interact with corporate clients and with each other.

Decentralised Ledger Technologies

At the heart of this revolution is the widespread adoption of decentralised ledger technologies (also known as DLTs, for example, blockchains) that allow us to create new asset classes, business models, and governance systems for the incoming digital age. DTL technology as blockchains are tamper-resistant ledgers of transactions distributed across a  network of nodes maintained by many stakeholders. These shared ledgers stored in each node serve as common sources of truth. They can complement or even replace the records of banks, corporations, and large FinTechs that act as an intermediary in many of the digital transactions. 

Blockchains are the first medium for digital value when currency and trade assets are fully digitized, just as the internet was the first medium for digital information. Financial services are no longer centralized within an industry; they are decentralised across blockchain networks such as Algorand, Bitcoin, Ethereum and Solana.

History

The revolution began in 2008, when visionary Satoshi Nakamoto (pseudonym of one or more cryptographers) wrote the white paper “Bitcoin: A Peer-to-Peer Electronic Cash System,” introducing a radical new concept: digital cash that can be minted, moved and  that can store value without intermediaries such as banks and governments.

DeFi, built on top of a distributed network of nodes (not corporations), extends Satoshi’s concept of peer-to-peer (P2P) electronic cash to lending, trading, investing, and managing risk. These innovations are possible thanks to a breakthrough called smart contracts, an immutable self-executing program based on a blockchain such as Algorand and Ethereum, which allows individuals to transact, do business and create value in a trustless and P2P way without the need for traditional intermediaries and gatekeepers. 

In Web 1.0, the internet was primarily a broadcast medium for publishing static information, including text, images, and video. Over time the internet has evolved into a collaborative communication medium in Web 2.0, becoming a platform for online mass participation (such as Wikipedia), workspace communities (for example, Google Meet ), engaging in social media (for instance Facebook and YouTube) and hosting web apps (like Dropbox and Google Docs), which have become indispensable for our daily social and work interactions. In Web 2.0, we have depended on centralized intermediaries such as banks, social media giants, and digital conglomerates to perform essential functions for us, including moving and storing value, verifying identities, and managing record keeping, contracting, and other business logic tasks to establish trust in online transactions. 

Several problems arise from this reliance. One issue with such intermediaries is that they are centralized, which makes them vulnerable to cyberattack and corruption. Financial intermediaries also add friction to online transactions, which can include days or weeks delays, high fees for international money transfers, and other profit-oriented behaviors. In addition, banks, social media companies, and Internet service providers are gatekeepers who exclude many people. For instance, in the banking sector, more than 2 billion people have no access to financial services. These gatekeepers also capture all the data and a great deal of the value created online. Some of the largest companies in the world, such as Google, Microsoft, and Meta, are digital conglomerates that have built their fortune, at least in part on user data. However, they do not protect our privacy—for example, the breaches of Facebook, Twitter and even Zoom recently.

The incentives of management, shareholders, and deposit holders are often misaligned by those in control, resulting in managers acting in the short term for their own sake at the expense of everyone else. We saw this misalignment in the actions of the big banks during the 2008 financial crisis, when managers took out large risks to earn handsome bonuses at the expense of customers, shareholders, and ultimately taxpayers.

Web 3.0

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). 

Blockchain Layer Scheme

In addition to these so-called “Layer 1” platforms, there can be additional blockchains (also known as “Layer 2” platforms) that help scale the Layer 1s so they are more efficient. For example, a Layer 2 platform called Polygon reduces costs and increases the efficiency of protocols such as Ethereum by moving some transactions out of the main chain. This is beneficial because the network can be congested due to the growing popularity of DeFi. Not all blockchains are created equal. The Algorand blockchain, for example, was designed with financial transactions in mind and has a more functional architecture with less coding and more security.  Algorand smart contracts lay in Layer 1 as opposed to Polygon smart contracts that lay on Layer 2.

Interoperability protocols, such as Cosmos and Polkadot, connect the various Layer 1s with each other so that assets can be transferred seamlessly between different platforms. The Cosmos network supports an “Internet of blockchains” known as IBC (the inter-blockchain communication protocol) that allows many other chains to connect with one another so that assets and applications can interoperate across different chains. IBC connects assets worth more than $150 billion. Finally, Layer 3 stands on top of these layers: the dapps in DeFi and beyond. 

Tags: AlgorandBitcoinblockchainCosmosDappsDecentralised Ledger TechnologiesDecentralized FinanceDeFiDLTEhthereumInternet of BlockchainsSatoshi NakamotoSolanaWeb 1.0Web 2.0Web 3.0
Previous Post

Implementing an E-Invoice System

Next Post

How DeFi Fulfils the Functions of Finance

John Goodden

John Goodden

Next Post
How DeFi Fulfills the Functions of Finance

How DeFi Fulfils the Functions of Finance

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

  • Trending
  • Comments
  • Latest
Tradeshift

Interview with Tradeshift

April 28, 2023
history of factoring

The History of Factoring

July 5, 2023
How are UK Factoring Firms Regulated?

How are UK Factoring Firms Regulated?

January 31, 2023
accounts receivable purchase agreement

A Guide to Accounts Receivable Purchase Agreements and Invoice Discounting Agreements

September 21, 2023
cash conversion cycle

What is the Cash Conversion Cycle?

trade receivables

What are Trade Receivables?

days inventory outstanding

What is Days Inventory Outstanding?

info graphic

What is Days Payable Outstanding?

federated learning

Federated Learning: A Privacy-Preserving and Efficient Machine Learning Technique

October 6, 2023
Dunning

Dunning: The Art of Collecting Debts

October 5, 2023
Russian rouble

The Collapse of the Russian Rouble: An Historical Analysis and Current Implications

October 4, 2023
ECAs

The Role of Export Credit Agencies in Trade Finance

October 3, 2023

Recent News

federated learning

Federated Learning: A Privacy-Preserving and Efficient Machine Learning Technique

October 6, 2023
Dunning

Dunning: The Art of Collecting Debts

October 5, 2023
Russian rouble

The Collapse of the Russian Rouble: An Historical Analysis and Current Implications

October 4, 2023
ECAs

The Role of Export Credit Agencies in Trade Finance

October 3, 2023
Facebook Twitter LinkedIn Youtube
Invoice Finance News - Magazine

Browse by Category

Recent News

federated learning

Federated Learning: A Privacy-Preserving and Efficient Machine Learning Technique

October 6, 2023
Dunning

Dunning: The Art of Collecting Debts

October 5, 2023
No Result
View All Result
  • Home
  • About
  • Podcast
    • Summaries
    • Articles
  • Invoice Finance
    • Basics
      • What is Invoice Finance?
      • What is Reverse Factoring?
      • What are Trade Receivables?
      • What is the Cash Conversion Cycle?
      • What is Days Inventory Outstanding?
      • What is Days Sales Outstanding?
      • What is Days Payable Outstanding?
    • Advanced
      • Invoice Validation and Fraud Detection
      • Reasons Why Invoice Finance is Better than a Bank Loan
      • How to Choose the Right Factoring Firm for Your Business
      • A Closer Look at Factoring Agreements
      • What is Trade Receivables Securitisation?
      • Breakdown of the Costs for Factoring
    • Factoring
      • Why Companies Use Invoice Factoring
      • What Companies are Suitable for Invoice Factoring?
      • Factoring and Invoice Discounting
      • How Factoring Works
      • Asset Based Lending
      • Is Factoring Right for Your Company?
      • Accounting for Factoring
      • How a Company Enters into a Factoring Agreement
      • The Costs Involved in Factoring
      • Changing Factoring Company
      • The Relationship Between the Factoring Company and the Debtor
      • Legal Aspects of a Factoring Company Pursuing Payment Through the Courts
      • Factoring in the Construction Industry
    • Fraud
      • Types of Invoice Fraud
      • How to Combat Invoice Fraud
    • E-Invoicing
      • Legal Status of Electronic Invoicing
      • The Benefits of E-Invoicing
      • Implementing an E-Invoice System
      • E-Invoicing Adoption in Mexico and The Rest of the World
  • Brokers
    • UK Brokerage Firms
  • Factoring Firms
    • Europe
      • UK
      • France
      • Germany
      • Italy
      • Spain
      • Holland
    • North America
      • USA
      • Canada
    • Australasia
      • Australia
      • New Zealand
  • Hi-Tech
    • Digital Platform/IT/Software Providers
    • UK Fintech
    • Articles
      • Enhancing Fintech Interoperability: Digitalizing Trade Documents for Efficiency and Security
      • The 7 Types of AI and Their Implications for the Future
      • Transforming Trade Finance: The Role of AI
      • The Different Programming Languages Used in Fintech Companies and Financial Institutions
      • UK and US Authorities Intervene in AI Sector
      • Web3 Applications and the Future of Trade Finance
      • What is Web 3?
      • What Can Fintech do for You?
      • What is Fintech?
      • Tokenisation of Finance
      • Payment Services in the Invoice Finance Sector
      • What is ChatGPT and Why the Fuss?
  • Rating Agencies
  • Securitisation
    • Deal Arrangers
    • Book Runners
    • Articles
      • The Roles of Deal Arrangers and Book Runners in Securitization
      • What is Trade Receivables Securitisation?
      • The Appeal of Trade Receivables Securitisation
      • Risk Mitigation for Trade Receivables Securitisation
  • Legal
    • Law Firms
    • Articles
      • A Guide to Accounts Receivable Purchase Agreements and Invoice Discounting Agreements
      • The Challenges of KYC and AML Checks
      • What is The Model Law on Electronic Transferable Records (MLETR)?
      • Snapshot of Factoring Legal Schemes in England and Wales
      • How are UK Factoring Firms Regulated?
      • What is ISO20022 and Why is it Important?
  • Rates
  • Economy
    • Economic Indicators
    • Articles
      • The Collapse of the Russian Rouble: An Historical Analysis and Current Implications
      • The Current State of the UK Economy
      • Economic Forecast for the UK in 2023
      • Economic News for 2022
      • Financial Crisis or Not?
      • Credit Suisse Bailout
  • Credit Insurers
    • Credit Insurers
    • Articles
      • Credit Insurance Legal Aspects
      • Credit Insurance in Trade Receivables Financing
      • The Benefits of Credit Insurance in Invoice Finance
      • Eligibility Requirements for Capital Relief by Using Credit Insurance
      • What are Export Credits and Country Risk Classifications?
      • How the War in Ukraine Affects the Price of Credit Insurance for Trade Finance
  • Associations
  • ESG
    • ESG Articles
    • ESG Resources
  • Crypto Finance
    • Ripple (XRP) Wins Latest Battle with SEC
    • UK Passes Financial Services and Markets Act 2023
    • Latest about the UK Regulatory Proposal for Crypto Assets
    • How will MiCA (Markets in Crypto Assets) Regulation Affect Trade Finance and the Banking System?
    • Markets in Crypto Act (MiCA) Becomes EU Law
    • An Introduction to EU’s Markets in Crypto-Assets (MiCA) Law 
    • Supply Chains and Blockchain Technology
    • The DeFi Revolution
    • How DeFi Fulfils the Functions of Finance
    • Taxonomy of Crypto Assets
    • Crypto Currencies
  • Interviews
    • Interview with Tradeshift
    • Interview with Kyriba
    • Interview with Orbian
    • Interview with Crossflow
    • Interview with Dancerace
    • Interview with BlackLine
    • Interview with Novicap Part One
    • Interview with Novicap Part Two
    • Interview with Karl Page
    • Interview with A P Trade Finance
    • Interview with vabble
  • Archive
    • Archive 2022
  • Videos
    • Videos
  • Contact Us