We have long since heard a catch phrase “All things digital” which depicts a digital future where everything physical or non-physical will be digitally represented, transmitted and stored. Coming into 2020, I think we are entering into such a digital presence considering ABCD (AI/Blockchain/Cloud Computing/Data) movement is happening everywhere at nanosecond speed!
Meanwhile according to my observation throughout my nearly 20 years of career life including multiple MNC employment and several startup entrepreneurship experiences, I made my own conclusion that “All business financial” It simply means for every business that ever existed or is existing in this world, there’s a financial model associated with it. Actually many others have already summarized that there are basically following ways to make money:
- Price-based: Selling products
- Fee-based: Providing services and charging fees
- Interest-based: Providing loans and charging interests
- Principal-based: Providing financial contracts/swaps/future/betting
- Asset-based: Issuing Assets(equities, debts…etc) to raise funds and making further profits on asset value increase
Thence, it comes my next conclusion or prediction which is “All finance decentralized” I suppose many audiences may have come across the fancy buzzword DeFi (Decentralized Finance) It means leveraging blockchain technology to conduct financial activities.
So what is DeFi?
There are many finance models, activities or services created via traditional technologies. Some are simply provided offline. Nowadays those financial services are mostly offered online with internet technologies like Web and Mobile applications. People start calling these as FinTech, i.e. utilizing internet technology to upgrade finance services to provide higher efficiency or cut cost, esp. human labor cost. E.g. risk control can be done automatically based on data analysis with rule-based engines or even deep-learning AI techniques to detect fraud activities.
Moving the traditional finance activities onto blockchain is possible and actually happening. The trend is almost inevitable: Asset issuance and distribution, e-payment, trading, lending and borrowing, saving, STO and financial derivatives… to name a few. All these and more others are happening on blockchain now and more and more people are enthusiastically participating in DeFi activities.
Why DeFi matters?
Firstly with blockchain technology it allows individuals to enter into a state of “You Own Your Own Bank”, meaning through owning one’s crypto wallet, he or she gets the exclusive right to decide how to utilize his or her crypto assets instead of any other third party. No one could ever tamper with or utilize your asset without you actively initiating a transaction and digitally signing it with your own private key that resides in your local wallet! However, with current centralized banking technology, the person who’s in control of the backend system and database could easily modify your bank account state without even getting prior approval from you.
Second, with DeFi, you achieve peer-to-peer financial activities without any middleman! It means much lower cost and higher security since it means a model of custody-free finance engagement.
Third, on-chain settlement is realtime and atomic! Blockchain technology inherently offers the distributed ledger capability and thus the settlement for all accounts that exist on one blockchain. In traditional world, settlement among different financial systems or organizations can be very lengthy and slow. Considering SWIFT, it sometimes takes you several days to weeks to complete a cross-border remittance but on-chain coin transfer could take just seconds (WaykiChain supports 3 to 6 seconds confirmed transaction speed) Being atomic, it means there’s no semi-success or semi-failure of the transactions. Instead, it can only be fully success of failure. It is unreliably and inconsistently supported in traditional financial systems but always by right supported by blockchain technology.
Fourth, you yourself can be a finance service provider and make profits with low to zero entry barrier. For an example, with WaykiChain’s DEX SaaS (Software as a Service) capability, “You Own Your Own Exchange” As long as you have the reach to a sufficient number of crypto asset investors or traders, you can provide such a decentralized crypto Exchange service to them with very little effort or cost to set up the service. The bulk of the work has been done at the base layer of WaykiChain and high-level services and/or applications like User Interface tools are also available for utilizing directly. As the exchange operator, you yourself can specify the rate of maker or taker fees that will go to your own account directly.
Fifth, financial inclusion works totally on blockchain DeFi! There are still about 30% of adults are unbanked in this 21st century! With the traditional CeFi (Centralized Finance) technology this gap could be just further widened instead of narrowed. But DeFi comes to the rescue!
Looking foreword into the far future beyond 2020, it’s clearly that DeFi will continue to grow with the programable money capability to change this world totally and tremendously. The best has yet to come! Stay tuned and prepared!
