Bitcoin was the first cryptocurrency ten years ago. It brought with it a promise to solve some of the biggest challenges associated with regular fiat currencies like the US dollar (USD) and the Chinese yuan (CNY) – including rampant inflation, counterfeiting, and centralization.
Even so, it is not Bitcoin that is poised to reshape finances as we know it, but rather the underlying technology known as “blockchain”. This decentralized ledger technology has gone through several iterations over the past decade, and one of the newest forms is set to radically shake up the way we manage our money.
The era of decentralized finance
Parity Labs’ substrate is currently the most advanced blockchain platform. (Image: Parity Labs)
The first generation of blockchains brought incredible security, transparency and efficiency not yet achieved with old financial technologies.
These first-generation blockchains are used to power platforms like Bitcoin (BTC) and Litecoin (LTC), which are capable of transferring value across borders in minutes, at a tiny fraction of the cost of traditional remittance companies.
Ethereum (ETH) and Cardano (ADA) presented the second generation of blockchain-based platforms. For the first time, they were able to host self-executing scripts, so-called smart contracts, which are executed in the blockchain and are automatically executed based on defined parameters. It used to be a dazzling array of blockchain-based applications, some of which offer functionality that mimics traditional financial infrastructure – like investment platforms, trading applications, and open credit platforms.
Many of these decentralized applications (dApps) fall into the “Decentralized Finance (DeFi)” category because they provide features that allow users to regain control of their finances and make better use of their cryptocurrencies.
With the advent of Substrate – a third generation blockchain platform – DeFi is now becoming mainstream. as projects will be able to create interoperable applications that leverage the unique properties of individual blockchains to deliver solutions that were simply not possible before.
NEW: @clover_finance has completed a $ 3 million startup round with @polychaincap to build an EVM bridge on @ substrat_io. @ Wsfoxley reportshttps: //t.co/ATlanGLY6I
– CoinDesk (@CoinDesk) February 18, 2021
Clover is the platform at the epicenter of this revolution. It is based on Polkadot (a substrate-based platform) and benefits from extreme scalability and security. At the same time, it enables a level of interoperability between applications that has not yet been seen in a blockchain system. It is used by projects to easily build and deploy high-performance decentralized applications that can serve virtually any purpose.
This will provide the next generation of blockchain-based dApps, which may herald the age of decentralized mainstream financing.
The power of programmable money
Platforms like Convergence can be used to tokenize and trade real assets. (Image: convergence)
Although blockchain technology is at the forefront of the burgeoning crypto industry, cryptocurrencies are also going through some kind of evolution. What used to be static digital assets serving a single purpose has now evolved into programmable entities capable of reshaping the way we think about money.
Nowadays, cryptocurrencies can be more than simple stores of value or currencies and represent virtually anything – from fiat currencies to goods and real estate to works of art and even traditional stocks. This has enabled the emergence of so-called “Synthetics Issuance” platforms such as XinFin and Synthetics, with which almost anything can be tokenized and represented as a blockchain-based asset.
In addition, programmable money can also represent even more complex asset types, whereby a single Unique can represent ownership or transfer or several units at the same time, ie basket assets such as BLEND or derivative positions – such as leveraged futures products, options and more. As you can imagine, these digital assets offer a lot more flexibility than is possible with simple cryptocurrencies like BTC or LTC – as they can represent anything, real or virtual.
This programmable money is currently being used to build increasingly powerful decentralized financial products that, over time, could potentially replace exchanges, clearing houses, banks, and virtually any intermediary we are familiar with in managing our finances.
As a result, the combination of decentralized funding and programmable look and feel will bring power back to the individual while eliminating costly, time consuming, and inefficient intermediaries who benefit from users and provide little in return. And given the current change in the industry, this could happen sooner rather than later.