Is Decentralised Finance just a fancier and less geeky way of talking about blockchain and cryptocurrency? As the technology behind such decentralized blockchain networks as Ethereum and Solana progresses and paves way for seemingly endless applications, more and more people are getting exposed to DeFi, without probably even knowing about it.
“DeFi and the Future of Finance” is one of the many exciting panel discussions of the virtual Fintech Inn conference taking place on October 21-22. According to the panelists, the introduction and mass adoption of Central Bank Digital Currencies (CBDCs) is going to disrupt the space massively, providing alternative digital currencies with much more government regulation.
“CBDCs are definitely the missing part of DeFi. We all have and still use cash – an asset that is not yet digitized or tokenized. We need CBDCs in this market, as some participants need the “solidity” they offer,” says Vyrautas Kašėta, co-founder & CIO of SUPER HOW?, a private DARQ technologies lab, and president of Crypto Economy Organisation.
CBDC projects have emerged all over the world, including in Lithuania, where the Bank of Lithuania introduced the world’s first blockchain-based digital collector coin. The monetary authority of Singapore has been experimenting with CBDCs since at least 2016, with a strong focus on B2B payments. Huge market players like JP Morgan and DBS Bank, one of the largest in Asia, are already reaping the benefits of these experiments.
“The coming and adoption of CBDCs will provide a safety element to the space that is currently dominated by stable coins. It’s definitely going to be a gamechanger in the broader adoption of blockchain and digital assets,” believes Chia Hock Lai, co-chairman of Blockchain Association Singapore and CEO of Switchnovate.
The arrival of CBDCs, however, is not likely to completely overtake the role that stablecoins enjoy today. The regulation of these digital currencies are bound to make monetary transactions more transparent albeit less private.
“If CBDCs were used like stablecoins, which I think they could be, I doubt that the regulators would be willing to issue CBDCs that could not identify the holder. I think it’s not going to take off in a way that we expect, and will live on parallel private blockchains, where the identity of holders will be known,” says Karalevičius, co-founder of Bankera and SpectroCoin.
While there is little doubt that CBDCs will become a part of our day-to-day lives in the coming years, another practical DeFi application is already taking hold across the world – Non Fungible Tokens (NFTs). An asset class that started on platforms like CryptoPunks and CryptoKitties, today found its way in the worlds of gaming, sports collectibles, and art. With sales volume of $2.5 billion in the first half of 2021 (up from just $13.7 million in the first half of 2020), NFTs are definitely here to stay.
“If something like Facebook’s Metaverse emerges, we will need a currency used there and exchanged between the users. I don’t think that the company developing the Metaverse should be in charge of its currency. We will indeed need a decentralised system to run this currency and control the flow of money there,” states Patryk Walaszczyk, blockchain consultant at IBM.
When it comes to pricing NFTs, there is no established practice yet, as the prices fluctuate and depend on a variety of factors, from scarcity to status.
“The Metaverse-like spaces are already very interesting. For example, in China, where gaming and in-game wearables are a huge deal, you already see in-game haute couture fashion items cost more than their real-life counterparts!” says panelist and panel moderator Ash Costello, a Member of the Expert Panel the EU Blockchain Observatory & Forum.
Join this and other discussions on the hottest fintech trends and challenges during the virtual Fintech Inn 2021 conference. Held on 21-22 October, Fintech Inn 2021 will bring together 250+ enterprises and start-ups, as well as 1000+ investors, policymakers, entrepreneurs and technology leaders from all over the world to exchange knowledge and discuss topics from green finance to startup media. You can get your free ticket to one of the largest industry events now on myOnvent platform.