Decentralized finance (DeFi) has huge potential to transform traditional financial services. Data from Emergen Research recently found that the global DeFi platform market size is expected to reach $507 billion by 2028. Moreover, the total value booked in DeFi currently exceeds $75 billion, showing fast-paced growth compared to the previous months this year. .
However, the potential of DeFi may still not be realized by business leaders who are not familiar with the blockchain ecosystem. This idea is highlighted in Alex Tapscott’s recent book, The Digital Asset Revolution. Tapscott, co-founder of the Blockchain Research Institute and managing director at Ninepoint Digital Asset Group, told Cointelegraph that he believes digital assets will be an important building block for a new internet, along with the financial industry that will transform business models and markets. However, Tapscott notes that so far, very few resources have been provided to help enterprise leaders understand the importance of digital assets. He said:
“Words like non-fungible tokens, central bank digital currencies, and stablecoins are alien to people who are not involved in the crypto and blockchain world. Our goal at the Blockchain Research Institute is to shed light on the potential behind various digital assets, explaining what these assets are and why people should care. It is written in an easy-to-understand language.
How DeFi relates to the financial industry
In order to help readers understand the concepts behind DeFi, the first chapter of Digital Asset Revolution provides a broad overview of how decentralized finance can reinvent financial services. Tapscott begins with a brief summary of how DeFi relates to nine specific functions in the finance industry: value storage, value transfer, value lending, financing and investing, value exchange, value insurance and risk management, value analysis, accounting and value auditing and identity authentication. .
For example, in terms of storing value, Tapscott mentions that individuals and institutions can use non-custodial wallets like MakerDAO to act as their own banks. In terms of financing and investing, Tapscott notes that aggregators such as Yearn.finance and Rariable can potentially be mediocre investment advisors and robo advisors. Looking at these different use cases, Tapscott notes that the lines between traditional finance and DeFi will eventually blur as adoption rates grow. However, this will likely not be the case in the near future, as doubts remain about DeFi.
Chapter 1 also looks at how a new ecosystem of digital assets emerged from the growth of DeFi. This is an important aspect of the book, as co-author Don Tapscott told Cointelegraph that business leaders are still very confused about what crypto represents. To illustrate, Digital Asset Revolution describes nine different classes of digital assets, focusing on cryptocurrencies, protocol tokens, governance tokens, non-perishable tokens (NFTs), exchange tokens, security tokens, stablecoins, natural asset tokens, and digital currencies. Central Bank (CBDC)).
Cover of the digital asset revolution. Source: Blockchain Research Institute
Cover of the digital asset revolution. Source: Blockchain Research Institute
Despite the importance of each of these assets, readers may be tempted to focus on the digital assets that are gaining traction today. For example, the book contains an entire chapter on stablecoins, showing how these coins hold the potential to transform legacy payment infrastructures like SWIFT.
Lately: Cryptocurrency Payments Gaining Gain With Centralized Payment Processors
This appears to be the case with some stablecoins, such as the US Dollar (USDC). USDC was recently approved by Banking Circle, a European bank focused on cross-border payments. But, some stablecoins have proven to be controversial. This was shown after the breakdown of the stable algorithm TerraUSD Classic (USTC) or Luna Classic (LUNC). As such, readers of the digital asset revolution still need to do their own research when looking at different digital asset use cases, especially as the sector is constantly evolving.
CBDCs are another interesting topic mentioned throughout the book. The fourth chapter is entirely devoted to digital currencies for digital goods and features a revised version of a webinar hosted by the Blockchain Research Institute with J. Christopher Giancarlo, former chair of the United States Commodity Futures Trading Commission and co-founder of the Digital Dollar Project.
In this chapter, Giancarlo explains what a “digital dollar” stands for, noting that the concept is very different from stablecoins, which are often tied to another asset of value. Giancarlo notes that a digital dollar, also known as a CBDC, is a valuable thing in itself. While there are still a number of concerns about digital central bank currencies, Giancarlo also explains why privacy is so important to the success of the digital dollar:
At the Digital Dollar Project, we
