Transparency and decentralisation have always been two core principles of blockchain technology. This is exactly why different certifications explain these concepts in mastering fintech products. At its core, blockchain technology follows a fundamental principle of making the process much easier compared to its contemporaries.
It forms a chain of visible networks in compliance with its values. When put together, these networks make up no lesser than a whole financial authority. This very process is called distribution which is powered by different nodes (computers). In 2021, the blockchain market was valued at $6.6 billion and is projected to grow by 10% by the end of 2024.
Let’s have a look at how DeFi or decentralised finances play a crucial role in determining blockchain’s assets. You can also learn blockchain basics through the Advanced Certificate in Fintech offered by the ISB. While we are at it, let’s examine its benefits in giving way to blockchain and popularising it on the whole.
How DeFi Became Popular
DeFi gained fast popularity as it let people carry out banking operations without the need for banks, making it the solution to a problem that had been surfacing for a long time. In many ways, people have access to hassle-free loans, and faster transactions in terms of payment. Let's have a look at how things changed for blockchain gradually.
History
2009: Although blockchain, the system behind DeFi, is credited for its launch in 2009 with the invention of Bitcoin, DeFi is the latest term. In recent times, the launch of Ethereum has popularised the concept of decentralised apps.
2017: It wasn't before 2017 that decentralised exchanges began using the term widely. MakerDAO, the popular decentralised exchange opened its coin offerings in 2017 and made it into the public domain. Although it suffered a malicious attack in 2017, Ethereum survived and is still available for purchase to this day.
Current Significance
DeFi has a huge market in this current day and age. Its improvised features make it a popular choice for individuals and alternate banking firms. Due to this popularity, it is seen as a sound investment opportunity by many.
To understand more about DeFi and how it has impacted the market, learn blockchain basics. You can get familiarised with the concepts surrounding DeFi and the current atmosphere.
Benefits of Decentralised Finance in Fintech
Master fintech products without going through any hassle. Opt for a Fintech certification course that explores these benefits with real-life examples -
- Absence of gatekeepers - Blockchain is famous for being an independent entity with its set of principles and operations. In saying so, it must be noted that it poses no need for big banks or even middlemen to do the work. This essentially indicates that no aggregator or banks control your money.
- Accessible to all - Decentralised finance is available for everyone who would like to acquire and invest in it. All you need is an internet connection with which you can access these services. Another factor that may play a role is the location or background in which you are based.
- Lucrative returns - One of DeFi’s features is its high-yielding opportunities which can be utilised by those interested. To master fintech products, you need to understand how you can work with blockchain. For instance, you can earn significant returns on your money with activities like lending, yield farming, and liquidity provision.
- 24/7 availability - DeFi’s central tenet is being accessible to its users without any time constraints. As DeFi operates round the clock, users can use its financial features like trading, lending, and other services at any point. This is a huge benefit as it caters to the flexibility and choice of the users.
- Inclusivity - DeFi serves as a choice for individuals who may have been barred from traditional banking or simply not given any support. This factor serves as a benefit to unbanked and underbanked populations globally.
- Educational content - DeFi poses a need for education of its features. The DeFi sector comes with its own set of complexities with modern financial technology and digital currency systems. As someone who wants to master fintech products, it is important to go for prior education regarding blockchain and its connection with DeFi.
Use Cases of Decentralised Finance
DeFi doesn't just rely on lending and borrowing but is also a multi-faceted concept. Here are the top twenty use cases of DeFi:
Lending and borrowing: Individuals can lend out their cryptocurrencies and earn interest or borrow assets without meeting intermediaries.
Decentralised exchanges (DEXs): DeFi platforms allow users to trade cryptocurrencies directly without intervening with centralised exchanges.
Yield farming: They maximise returns by moving funds between different DeFi protocols. In return, users earn the highest yield.
Stablecoins: Digital currencies offer stable assets much like the US dollar providing stability amidst crypto fluctuations.
Insurance: DeFi protocols offer decentralised insurance options, protecting against risks like smart contract bugs or financial losses.
Prediction markets: These platforms enable users to bet on outcomes of future events.
Decentralised autonomous organisations (DAOs): Community-led organisations are where decisions are made by token holders. This enables collective decision-making.
Asset management: Automated protocols manage investment portfolios based on predefined rules, thereby optimising returns for users.
Tokenization of assets: They convert real-world assets into digital tokens, allowing fractional ownership without any hassle.
Cross-border payments: Swift, low-cost transactions take place without the need for traditional banking systems.
Decentralised identity verification: DeFi provides a secure and self-sovereign identity solution previously promised by centralised systems.
Supply chain financing: DeFi uses a smart contract to facilitate payments which ensures transparency and efficiency.
Decentralised credit scores: Algorithms analyse DeFi transaction history to determine creditworthiness for loans. This system eliminates traditional credit checks.
Real estate crowdfunding: With DeFi, you can own fractions of real estate properties, making real estate investment more accessible.
Micro-financing: DeFi opens up small loans for individuals or businesses in developing countries without demanding collateral.
Gambling and gaming: Gaming platforms or casinos trade with a more transparent and fair system.
Decentralised savings accounts: With DeFi, you can earn interest on deposited assets without a traditional bank account.
Charity and fundraising: Transparent donation platforms ensure funds reach their recipients without intermediaries.
Decentralised oracles: These provide external data to smart contracts which is crucial for executing complex transactions.
Education and governance: DeFi platforms educate users about financial literacy while also involving them in decentralised mechanisms.
Conclusion
Staying ahead in the commercial era is crucial as it keeps developing with time. By 2023, Forbes has predicted that the blockchain may exceed a CAGR of 59.9%. Ensure your place in the fintech revolution! Take a certification to prove your skills towards your goal in the blockchain technology industry.
The Advanced Certificate in Fintech from The Indian School of Business (ISB) equips you with the skills needed to excel in blockchain while qualifying you for various reputed job roles like blockchain developer, architect, or even legal advisor. The curriculum is designed with subjects that delve into both the basics and advanced skills as seen in blockchain and its features. Learn blockchain basics from a reputed organisation and hone your skills to industry standards. Sign up today!
