A New Era of Crypto: Digital Switchover 2.0

As cryptocurrencies begin to cement themselves into the wider financial system thanks to growing interest from previously wary institutional investors and blockchain technology’s increasing integration into our everyday lives, the way is being gradually paved for a world where all money and financial products are digital. The driving force behind the ultimate shift will undoubtedly be decentralised finance (DeFi), which is slowly but surely making the transition from conceptual technology to commercial use. Stablecoins will certainly play a pivotal role in this space as their inherent stability make them far more suited for such applications. Indeed, apart from private projects like Tether and Paxos, global central banks are all working overtime to roll out their own CBDCs (Central Bank Digital Currencies) in order to meet popular demand for low-volatility cryptocurrencies. With 2021 touted as the year of DeFi, we can expect to see even more integration of this technology. That can only be good news for the cryptocurrency whose architecture makes it all possible: Ethereum.

So, what is DeFi anyway?

DeFi just stands for decentralised finance. It basically does what it says on the tin. It takes away the need for intermediaries in a range of financial transactions and agreements. Using the same blockchain technology central to cryptocurrencies, two parties can enter an agreement with a virtually unlimited number of variables and stipulations. There’s no need for a third-party enforcer or middleman as the technology itself creates a smart contract that’s essentially self-fulfilling. For example, imagine you want to agree to pay someone 5 ETH if they perform a certain task for you. Your 5 ETH will be earmarked, and as soon as the other party delivers on their end of the bargain, the money will be immediately paid to them over the blockchain. This means both parties have total peace of mind that the other will make good on their promise and, best of all, there…

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