Why NFTS and DeFi Will Revolutionize How We Do Business
DeFi and NFTs are two major innovations that will revolutionize the way that businesses operate. Decentralized finance and non-fungible tokens are two of the most popular applications in blockchain technology. DeFi allows decentralization of access to financial services, while non-fungible tokens enable the tokenization of assets.
Today, as we prepare for a future that seems to be rapidly approaching something out of a science fiction novel, it has become essential to reflect on the possibilities of leveraging the NFT/DeFi combination and how it will change how we do business forever.
What are NFTs?
Non-Fungible Tokens (NFTs) are among the most powerful concepts to emerge from blockchain technology. NFTs are redefining ownership in digital environments. The internet generation cares more about avatars and profile pictures than physical objects. As the world embraces the transition to digital lifestyles and, eventually, an internet-native metaverse, NFTs will become the artifacts all around us.
What is DeFi?
The possibilities that decentralized finance (DeFi) can bring about are overwhelming. For example, you can now have lending agreements for millions of dollars between two parties a world apart who don’t know each other’s true identities. These agreements may involve individuals, computers, and/or corporations. There’s no need for identities or legal contracts. And yet, you can have billions of dollars of financial arrangements occurring between these parties.
The importance of decentralization
Decentralization is a means to an end. The end is very high-security guarantees that are ultimately technical properties of the system. You can’t have platforms, assets, and monies not owned or operated by a central party without decentralization. So it’s really about the security guarantees created through decentralization, much more than decentralization itself being the goal for the end consumer. It’s unlocking these new possibilities and types of behavior through decentralization.
How do NFTs store value?
To understand the possible link between NFT and DeFi, you must first understand what can be tokenized. For example, NFTs are tokens with realistic value propositions in real estate. Real estate investments can be highly illiquid and require lots of documentation. Bringing the assets on blockchain as virtual tokens can help in the more convenient representation of ownership and flexibility for transfer. In addition, NFTs could help unlock and mobilize value in cases where it was difficult to mobilize value. For example, music artists offering NFTs as tokens for participating in direct engagement sessions with them. The value of the offering is an essential factor for determining its value. Since NFTs offer a value proposition, hence they must have a price.
DeFi platforms using NFTs can revolutionize the music industry and art world. How? NFTs will drastically impact ownership by allowing rights and profits to the creators, removing the go-betweens such as corporations profiting off from the works of artists. NFTs owners can earn a reliable share of their works’ streaming revenue or resale value.
The future of NFTs and DeFi
2021 was when people really started noticing non-fungible tokens. Those involved in NFTs predict 2022 to be the year the world won’t be able to look away as new applications and use cases continue building adoption. For the most part, NFTs have been conceived of as static digital objects — tokens representing art or digital goods, tradable for seemingly ever-increasing amounts of money. The NFT, or a close permutation, is more likely to be the future of content than a momentary fad.
The technology energizes content creators, enhances networks and marketplaces, and, most importantly, empowers customers and fan communities. Traditional art has conventionally been treated as collateral in the physical world. But transitioning NFTs into the domain of DeFi seems like taking a reasonable step toward the future. Moreover, NFTs could also improve the DeFi sector by resolving liquidity issues with tokenization which could redefine the preparation of illiquid assets. It will make dealing with illiquid assets far more convenient and flexible.
That’s precisely why the future of decentralized financing (DeFi) and non-fungible tokens (NFTs) goes far beyond social status, memes, or multimillion-dollar works of art turned into profile pictures. From decentralized finance (DeFi) to non-fungible tokens (NFTs) amidst the emerging concept of the metaverse and its proponents. The revolution in digital assets has kicked off by disrupting banking. It will inevitably reshape the world as we know it, changing how we do business forever.
