Learn About DeFi, DApps and NFT Collectibles

 

What is DeFi ?

Decentralized finance (DeFi) is an open monetary system (open finance) built on blockchain technology that is decentralized and immutable. One of the motivations for the development of the Decentralized Finance system is that many people around the world still lack access to financial services. Although the existing conventional financial system plays a role in building wealth for the world's population, it has not yet reached the lower class population.

Decentralization means there is not a single point of failure, because the same records are stored on multiple computers / nodes via a peer to peer network. Due to the permissionless nature of the blockchain network, it is open to anyone, regardless of how much money they have, where they live. Unlike banks or payment companies that can close accounts from customers who don't meet the requirements, the character of blockchain is censorship resistant.

Potential Impacts of Decentralized Finance

The following are the potential impacts of decentralized finance on the world:

Global access to financial services

With decentralized finance, anyone with an internet connection and smartphone can access various financial services that were previously constrained by the system:

Status: no restrictions on nationality, documentation

Wealth: A sufficiently high limit to access financial services

Location: Long distance between economic activity and financial service providers.

In a decentralized financial system, great traders in the world's financial companies will have long-standing access like farmers in remote areas in any country like India or Indonesia.

Affordable Cross-Border Payments

Decentralized finance removes expensive middlemen and makes remittances cheaper across the globe.

In the current system, it is very expensive to send money between countries with an average remittance fee of around 7%. Through decentralized finance services, remittance fees can be reduced to below 3%.

Improved privacy and security

In decentralized finance, users who have direct access to their accounts (= wealth_ and can carry out transactions safely without validation from the central authority (e.g. banks).

In the previous system or centralized finance, the central institution kept all the assets of its customers and the information that was there faced the risk of failing to secure it.

Censorship resistant transactions

In a decentralized system, transactions are immutable and the blockchain cannot be closed by governments, central banks or large companies.

In a situation of dictatorial government (such as many countries in Africa: Venezuela), users can transfer their funds to decentralized finance to protect their funds. For example, in Venezuela many people move their money to Bitcoin to protect their wealth from currency manipulation and inflation is unusually high.

Easy use

In many cases, decentralized finance makes certain types of transactions easier when compared to the complexity of a centralized system for similar services.

For example, with a decentralized system, women in Maluku can get investment from their business from other users in Brazil.

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DApps Is ?

DApps (Decentralized Applications) is a type of application that is currently being discussed, where this application is not owned by anyone, cannot be turned off, and the system cannot be down.

This type of application is called DApps which is short for Decentralized Applications, decentralized applications.

1. Open Source - Application source code must be accessible to everyone
2. Decentralized - All application operation records must be kept in public and decentralized systems to avoid central control
3. Incentivized - The application has a cryptocurrency / token / digital asset to run by itself
4. Algorithm / Protocol - Generates tokens and has a consensus mechanism built into it

If you follow the definition above, it can be said that the first DApps were Bitcoin. Bitcoin is a general ledger that makes transactions more efficient without intermediaries and central authority.

How Does a DApps Work?

DApps work by implementing the four criteria above. This means that DApps is a software platform that is open-source and implemented on a decentralized Blockchain system, and runs using tokens generated using an algorithm / protocol.

What are the uses of the NFT?

NFTs can be used by decentralized applications (DApps) to issue unique digital goods and crypto collectibles. These tokens can be used as collections, investment products, or something else.

The gaming economy is nothing new. And because many online games have their own economies, it is easy to use blockchain to tokenize game assets. In fact, using NFTs has the potential to solve or reduce a common inflation problem that many games have.

While the virtual world is developing, another interesting use of NFTs is the tokenization of real-world assets. This NFT can represent a fraction of the real world assets that can be stored and traded as tokens on the blockchain. This process can add much-needed liquidity to many types of markets, such as the arts, real estate, rare goods markets, and so on.

Digital identity is also a sector that can take advantage of NFTs. Storing identification and ownership data on the blockchain will improve data privacy and integrity for many people around the world. In addition, the easy and trustless transfer of these assets can reduce friction in the global economy.