Traditionally, markets have been a place for vendors and traders to come out to and show their products to the world. With time- rules, regulations and customs gave the present-day physical market its familiar form.
Then the shops shifted to the internet with the same working model of a big market (e-commerce giants) hosting small shopkeepers and vendors (the actual sellers on the platforms). The current market is basically run by one central authority in its domain and small, less powerful authorities, namely the small merchant. The age-old adage of customer is the king might be there, but the real power still lies with the big bosses. The average user cannot see the workings of the market, and any attempt is sabotaged by the system, which protects the shop more than the customer.
There has been the introduction of consumer courts and stricter policing of malpractices like corruption and adulteration. If the consumer cannot verify the workings from the get-go, then it remains redundant.
And the solution to this problem can be Decentralised Finance (DeFi). A market where everyone has the power to influence decisions. If a system is designed to incorporate the needs of a consumer, then it automatically becomes more inclusive. And more inclusivity is always better.
So, what is DeFi exactly?
To understand DeFi, we first need to understand what a blockchain is. Skip a few paragraphs if you are already well-versed! A blockchain is a technology upon which a cryptocurrency, or a set of cryptos, are published and run. It is like the road network, but for a digital currency. On this road called blockchain lie, several houses called nodes which are like the check-posts for any transaction that takes place on the transaction. Nodes are basically computers that use the network to send and receive cryptocurrencies.
What does DeFi have to do with any of this? Simply put, decentralised finance aims at creating an ecosystem where e-commerce can be set upon the blockchain itself. It is akin to simplifying the shopping experience with crypto using e-commerce sites. The current system uses two different technologies. One is the normal internet users use to browse and buy products. The second is blockchain technology which helps in the payment procedure.
Now imagine a system where digital currency technology or blockchain is the shop. The current system relies on both these technologies separately and doesn’t provide a merger. DeFi will make sure you can shop from your crypto wallet itself!
How would it be done?
The work is currently in progress on the Ethereum (ETH) blockchain. The Ethereum team is upgrading the blockchain and naming it ETH2.0, which aims to increase transaction speeds and making a sustainable market. This includes modifying the source code of the blockchain itself and adding functionality for a better experience.
Besides Ethereum, there are other cryptocurrencies and blockchains which aim for such a mission. These projects, however, are still in a very early stage of development. If a good chunk of projects approve of this new advancement, this could prove to be as big of a leap as e-commerce itself.
Why should you care?
First and foremost, the best part about the whole crypto-sphere is the adulation of new technology. With what we see right now in the crypto world, the inception of new projects leads us to believe the average Joe can change the market too.
With the introduction of virtual products and art (NFTs), the traditional market is changing. The next logical step would be to bridge the gap between the crypto world and the e-commerce world. This severing of a gap would mean ease of access, better connectivity, fewer apps on phones unlocking new tech. Perhaps this may lead to better-connected infrastructures and the development of even better technology. At the end of the day, any advancement in the tech field will bring better comfort to the average person sooner or later.
The best part? No more market manipulation and pressure from mega-millionaires. If every transaction happening from a node is public, the chances of corruption become slim. The people will no longer need e-commerce to set their shop in. They can directly set it up on a blockchain when the world is ready for it.
You are a part of the world. Are you ready for DeFi?