By John Brown
Blockchain, crypto, NFT, metaverse, decentralized finance, these technologies have grown in popularity in recent years due to their ability and potential to change the way we interact with the world. Outdated systems begin to crumble with the continued implementation of these new technologies.
In this article, we will focus on DeFi, or decentralized finance, and its role in the metaverse.
What is DeFi?
DeFi, or decentralized finance, enables financial transactions without the usual middlemen found in traditional finance. For example, in today’s traditional economic landscape, you have to go through a broker or a bank if you want to get a loan.
However, to make the process easier, you can also rely on online lending platforms like GetCash.com to get unsecured payday loans with shorter waiting times. With lending platforms like these, you get access to approved lenders who work with people with less than perfect credit scores.
That said, DeFi is helping to build a more inclusive economy for everyone by providing open access to financial services that central intermediaries once monopolized. Additionally, by eliminating counterparty risk and giving users control over their data, DeFi ushers in a new era of trustless finance.
With its promise of greater economic autonomy and inclusion, it’s no wonder that decentralized finance has become one of the top trends in the blockchain space.
What is the Metaverse?
The way we talk about the Metaverse is similar to how we talked about the Internet in the 70s and 80s. The Metaverse is essentially a 3D version of the Internet, a “universe” where you can exist digitally. In this parallel universe, you can have an avatar and interact with other avatars.
Experts agree that the metaverse in its truest form doesn’t yet exist because we don’t have the infrastructure to fully realize it. However, when the time comes, it will enhance the VR experience. Users will be able to jump into the virtual world and do things they would also do in real life, such as shopping for clothes, throwing parties, and even getting married.
What role does DeFi play in the metaverse?
The metaverse needs several components to come to fruition: NFTs to serve as identities, DeFi, and on-chain credit scoring. These elements come together in unique ways to form a virtual world where you can exist digitally.
Therefore, the metaverse will require a trustless financial system to function well. This is where DeFi comes in. Decentralized finance will provide the basic crypto-decentralized structure the metaverse needs to hold its currencies and economy where users can earn, spend, borrow, lend, or invest without a central processing unit. governance.
However, although the metaverse exists in the digital world, its components are deeply embedded in the physical world. Therefore, if the metaverse wants to include people around the world, it will have to make peace with the fact that governments around the world will scrutinize it and seek to regulate it.
The future of DeFi
Due to decentralized trading in DeFi, assets can be transferred from one form to another without the need for a buyer and a seller. Currently, there are only a handful of assets that can be traded in the space, but that could include previously illiquid assets like art and real estate in the future.
This could mean that within the next decade you will be able to walk into a store and pay using a digital wallet containing all sorts of assets you own, perhaps US dollars, bitcoins or NFTs.
You can essentially walk up to the cashier, and a simple scan of your smartphone will enable a transaction from your digital wallet which contains all of your assets. You would be able to pay with any asset you want, and the store could accept payment in whatever form of asset they want. With enough cash, the possibilities will be virtually endless.
Authors biography :
John is a financial analyst but also a man with different interests. He enjoys writing about money and giving financial advice, but he can also dive into relationships, sports, games and other topics. Lives in New York with his wife and a cat.