The Argument For Crypto
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The world has gone berserk ever since the pseudonymous creator Satoshi Nakamoto invented the world's first cryptocurrency. While nation-states and centralized regulators are growing increasingly skeptical (with El Salvador and Brazil being exceptions), enthusiasts keep pushing the boundaries of what money could be.
Cryptocurrencies, or crypto (referring to the larger ecosystem), are only a little more than a decade old and the space is very early, innovation-wise. Take into consideration that the world's most famous painting, the Mona Lisa, was only widely appreciated 400 long years after its creation. I believe blockchain technology is also a phenomenal piece of art (metaphorically) that will transcend generations.
In blockchain technology's existence, we have seen its applications in a wide variety of industries. But three main blockchain applications have stood out, gaining mainstream adoption and solving real-life problems. These are NFTs, DAOs, and DeFi. Here me out, as I break down these innovations, and I emphasize the fact once again that good things take time. Rome was not built in a day.
Before I get into NFTs, DAOs, and DeFi, it is worth noting that due to the design of blockchains, everything revolves around tokens. Developers configure tokens per certain standards to suit particular use cases. Technically, cryptocurrencies and crypto tokens are different things but that's for another day. Now let's get into NFTs.
Non-fungible tokens, popularly known as NFTs, are a type of crypto tokens that have a maximum supply of one, and cannot be broken down into fractions (like a regular token). The properties of NFTs make them suitable for storing digital goods including art, which has been a popular use case so far. But NFTs are more than digital art.
NFTs can be used to represent credentials from verifiable institutions like universities, or state agencies like the police (ironically). NFTs can also be used to represent proof-of-access or proof-of-participation in events like conferences. Anything relating to digital identities can be represented with NFTs. The NFTs space is very early, therefore there's more innovation to come. Now let's take a look at DeFi.
Decentralized finance, also known as DeFi, is a crypto innovation that removes the middlemen in digital financial transactions. By middlemen, I am referring to centralized institutions like banks and fintech applications that require regulator licenses to operate.
One may ask, "Why the need for DeFi, when traditional systems are working fine.?". The reason why human civilization as a whole needs decentralized finance is the fact that you cannot trust your bank or whoever holds your money to always act in your interests. With DeFi, you become your own bank. DeFi gives you the power to do whatever you want with your money at any time you please. There have been numerous cases of financial institutions freezing the funds of depositors without cause or notice.
DeFi is still very much under development so it is not as 100% decentralized as it appears to be. Nonetheless, half a loaf is better than none. Examples of some popular decentralized applications (dApps) are Aave, Uniswap, Yearn Finance, and Compound. Now, let's get into DAOs.
Decentralized autonomous organizations, also known as DAOs, refer to any organization that is structured in a way that it is able to function without leadership. A DAO may have all or parts of its operations automated with little or no human interference or it may be manually run by contributors who assume roles that do not come with any leadership responsibility.
DAOs of different types are seen within the crypto space, and some notable examples are Bankless DAO, Metrics DAO, and Maker DAO. If you want to get started in crypto and make some money, the best way is to join a DAO, and take up a contributor role. Like DeFi, the current crop of DAOs is still centralized in one way or the other.
The crypto space with its underlying blockchain technology is here to stay and scrutiny from nation states only make the space stronger. I must, however, sound the caution that, the crypto space is rife with scams and hacks. So always do your own research (DYOR), and always double-check your transactions if you're interacting with a decentralized application. Finally, do not be afraid to live by your own conviction, because crypto = freedom.