Yes, Decentralized Finance (DeFi) may take over the world. But it will be more of a convergence of both legacy finance and Decentralized Finance (DeFi).
Decentralized finance (DeFi) has been one of the highest growing fields within the crypto space lately.
So much so that people think that we may be on the verge of a revolution in finance.
All kinds of products have proven to work regardless of situations that occur outside the crypto space.
Decentralized finance (DeFi) is now working technology.
The big question is if DeFi will be around in ten years.
Regulatory Issues Surround the Implementation of Decentralized Finance (DeFi)
The regulation of DeFi has proven to be an issue.
Many governments have tried to put decentralized finance (DeFi) on a leash.
Sometimes this worked.
In other cases, this hasn’t.
It doesn’t mean, however, regulation won’t occur.
It just means that governments will have to catch up in terms of the required technical knowledge.
Without adequate knowledge about decentralized finance (DeFi), regulation becomes impossible.
Decentralized Finance (DeFi) could provide a means for money laundering and illicit goods.
It is what has many within the financial world concerned.
However, several solutions exist for these problems.
The first of these is the use of oracles.
Oracles Could Aid the Regulation of Decentralized Finance (DeFi)
Everyone within the crypto space has seen how data oracles have solved the immutability situations that blockchains and distributed ledger technologies (DLTs) have presented.
It is this sense of dynamism that has changed how blockchains and DLTs function.
There are new and exciting opportunities for entrepreneurs who can use data oracles to solve problems.
One such example of projects where this happens is the Confirm Oracle.
Confirm allows for the tracking of DeFi addresses that are probably suspicious or may be subject to investigation.
All of this is possible with the Confirm Oracle.
The approach may conflict with the privacy-oriented perspective that many parties within the crypto space hold.
Such parties think that all cryptocurrency-related transactions should be pseudonymous or private.
However, such views haven’t factored in criminal activity.
Cryptocurrency exchanges face security threats all the time.
Criminals are scamming people right, left, and center.
These are occurring, and there are very few tools that exist to track and trace decentralized transactions.
If the adoption of cryptocurrencies, blockchain technology, DLTs, and their allied technologies were to happen, transparency is compulsory.
Transparency Will Boost Decentralized Finance (DeFi) Adoption
While the esoteric members of the crypto space think that privacy is compulsory, transparency enables adoption to occur.
There are many advantages to decentralization.
Some include security, instantaneous settlement, market momentum, and so on.
However, transparency allows for greater acceptance of digital assets.
Because digital assets within the DeFi space aren’t listed on centralized exchanges, it has become difficult for the regulatory authorities to regulate them.
It has also become difficult for the public to trust such assets.
Again, data Oracles could come to the rescue and provide the much-needed transparency for digital assets.
Oracles and their associated technologies could also provide value-added services such as the rating of decentralized products, pre-listing activities, digital asset insurance, project tracking, and so on.
It all depends on how decentralized finance (DeFi) evolves.
Other blockchains asides Ethereum need to evolve and become popular.
The foundation of this, of course, will be smart contract functionality.
Smart Contracts Need to Work on Other Blockchains for Decentralized Finance (DeFi) to Grow
For the most part, the Ethereum developers have brought all kinds of functionality to the crypto space.
We are all now doing things that we never thought about before.
The inclusion of smart contracts in the Ethereum Virtual Machine (EVM) setup has allowed for the execution of code using Smart Contracts.
Many older legacy blockchains haven’t yet forked to include smart contract abilities.
The new kids on the block, however, have smart contracts as a core feature.
Some of the new blockchains that have this include the Aspire blockchain, the Telos blockchain and so on.
Other blockchains such as the Polkadot blockchain don’t natively support smart contracts but may do so through the use of “parachains” that run off main blockchains.
It is also the use of smart contracts that have allowed for the creation of the D’app community.
If Decentralized finance were to rise and gain mainstream interest, developers from all spaces should be able to code apps and smart contracts with ease on different kinds of blockchains and DLTs.
It is this interactivity that will ensure that the DeFi space has everything that it needs to grow and explode.
On the whole, decentralized finance is bringing all sorts of new possibilities to the world.
We have moved from an independent world to an interdependent one.
Decentralized finance (DeFi) will increase and improve or the interconnected nature of things.