by Jose Molina from Criptan
When talking about finance, people typically have the idea of a bank where they can deposit their funds. Since those funds are already there... Why not use them for good? And the bank provides financial services out of the box, using a fancy user interface where users can get loans, invest in stock markets, or simply exchange their currencies.
Furthermore, have you ever considered how people own things? Whether you have a house or a piece of intellectual property doesn’t matter, recognition of a private property is always made by the State, hence becoming yet another intermediary and yet another single point of failure.
All these services come with severe inconveniences: they are centralized and full of intermediaries. That has two main disadvantages:
You do not preserve your privacy. The intermediary has all the information about you and your operations, and such information can be compromised.
You must trust the intermediary. You always have to rely on third parties to perform any action, and that requires that you must trust them no matter what. And trust is a dangerous vulnerability.
Still, this whole mechanism came out of human evolution. This is the best we could do so far, and regardless of its weaknesses it was the best that could be done given the circumstances. The thing is... circumstances have changed.
With Bitcoin, for the very first time in human mankind, we could finally own things on the Internet. At the beginning we could only own virtual assets called “bitcoins” that were worth eventually nothing, but that thanks to the decentralization and security of blockchains people realized value could be stored in these assets.
OK, that was a great achievement. A decentralized, trustless, open, secure, permissionless network that can be used to transfer value at almost zero cost in just a few minutes? That is certainly a huge progress, since so far we could only copy information over the internet, but we could not own anything and prove that ownership to a third party without an intermediary. Bitcoin solves that part, but... could we do better?
And the answer to that question is Ethereum. Yes, we definitely can do better. Transferring bitcoins is great, but what about performing operations with the value that lies within these assets? If we would like to do that we would require custom logic that supports complex high-level operations, which implies a programming language that supports such complexity. And this is where Ethereum shines: the Ethereum blockchain allows for the inclusion of such custom code in the form of the so-called “smart contract”.
In a nutshell, smart contracts are nothing but binary code stored on the blockchain that performs operations with the assets within. Thanks to that ability, now we can:
Create more currencies with the so-called ERC20 tokens. This includes a particularly interesting case: stablecoins. Stablecoins are ERC20 tokens that have a constant value of a real-world currency that is supposed to be stable in the mid-short term. Good examples of these tokens are DAI, USDC and USDT, all of them linked to the American dollar.
Exchange between these tokens with decentralized exchanges like Uniswap.
Create collateralized loans with platforms like MakerDAO.
Represent property through ERC721 tokens. These tokens are the famous NFT (Non-Fungible Tokens), and they are becoming a fashion these days.
And much more yet to be discovered...
As a summary, Ethereum is a disruptive technology that is here to stay. With the inclusion of smart contracts now a whole world of possibilities is open for us. It has such a potential impact that it could even change how we conceive financial services in the near future, so that they can be more trustless, secure, private and accessible for everyone. And I bet we will see that future sooner than we believe.
Criptan is a cryptocurrency trading platform with a service of integrated custody that seeks to bring the world of cryptocurrencies to people’s everyday life, focusing on delivering returns and profits on top cryptocurrencies. It is a Spanish company founded in 2018 by Jorge Soriano, an architect who has worked for years in strategic and creative consulting, with extensive experience of more than six years in the crypto world, and Jaume Sola, linked for more than 30 years to the innovation and technological ecosystem, which has collaborated since its inception on platforms such as Flywire and other of the most important technological ones.
Both understand cryptocurrencies as a new form of money that has to be accessible to all people. Therefore, they decide to create a platform focused on simple and reliable access that is the gateway for this type of user. Partnering, to complete the project, with Enrique and Pablo Penichet, founders of Bbooster Ventures, Manuel Palencia and John Nahm, Managing Director of Strong Ventures.
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