I was reading this really great opinion content on forkast on the growing blockchain markets, generally, I couple of striking points was laid out with compliments on all we've been treating over the years on how cryptocurrency, blockchain, and its associated products affect the global financial sector - and the general economy at large. But then, a wave of misinformation hit me, however, starting with what's good, to name one,
Decentralized Trading and Investment
A not-so-popular method of trading or acquiring digital assets, most often classes of assets with less industry strength, both status and money-wise to make it to the secondary markets has been to leverage OTC trading.
In full, this means "Over The Counter".
To many, OTC trading seems like a more peer-to-peer type of trading, but given that trading relationships are formed with brokers, who are intermediaries, OTC trading positions itself to be generally inefficient, even possibly more than established centralized exchanges.
Imagine how we could unlock greater efficiency in capital markets through blockchain technology. Tokenization allows financial and other assets to be fractionalized and securely and reliably represented on a distributed ledger. Combined with smart contracts, which allow the automatic execution of transactions when pre-determined conditions are fulfilled, these assets can in turn be traded, borrowed, or loaned across peer-to-peer networks through decentralized finance (DeFi) without the need for intermediaries. This in turn improves the speed, efficiency, and transparency of these processes.(s)
This comes after a brief dismissal of how present trade practices are on a large scale - inefficient. If we pay history a visit, regardless of how not so distant in time it may be, the recent exchange storms over liquidity squeeze exposing the bad practices of custodians in the space, I could recall shouting out to dump the idea of proof of reserves being a security measure, it seems, however, that people are beginning to see things in my perspective as reports of late drills the same topic.
We are moving past the era of middlemen business management structures, the larger finance ecosystem needs to embrace self custody, because that way, centralized entities will have little to no leverage on the industry.
Issues on Scalability
I feel the need to say that the majority of people that rant about how blockchain is efficient and not scalable are complete falloffs. There really isn't a need to put those FUDs out there if you can't confidently point out the areas that need scaling.
Take Ethereum for exchange, at the time, Ethereum is no longer just Ethereum given the numerous layer 2 releases, what we are currently dealing with is highly scalable, how? This is because numerous solutions have been built around it.
We have Polygon combating fees pretty damn well, and Optimism building an extension to Ethereum that modifies the current technologies like the Ethereum virtual machine to redesign a much more scalable network, not as an Ethereum replacement, but as a scaling layer. These products merit the Ethereum blockchain overall because they are alternatives that bring back value to the parent chain, it is similar to past discussions we've had on "mass adoption" where we came to the realization that onboarding is really never about the full build-ups of a parent chain, but the products of those networks.
But then, we see folks hitting on the idea of crypto needing to be interoperable with legacy financial structures. Honestly, the angle is quite understood but what crypto needs is the ability to port over these existing legacy structures and products on-chain, not to bridge the system specifically, that's really a secondary need, not even a considered use case.
The miss-representation of DeFi
There are things we need to understand as a community, when a blockchain is centrally managed, we can call it a private blockchain, even with its publicly available ledger records. Similarly, if a blockchain-based asset is centralized by how it's created and circulated, it is not a cryptocurrency!
And to the last one, when a digital financial system is centralized, it cannot be called DeFi, there's no such thing as permissioned DeFi, it's either permissionless or it's not DeFi.
In Singapore, specifically, the country’s financial regulator — the Monetary Authority of Singapore (MAS) — has played a leading role in enabling innovation at scale within a safe and controlled environment. In May 2022, MAS launched Project Guardian, a collaborative initiative with the financial industry that seeks to explore the economic potential and value-adding use cases of asset tokenization, while managing risks to financial stability and integrity. In less than six months, the project completed its first industry pilot.
The pilot, which was led by DBS Bank, J.P. Morgan and Marketnode, tested the trading of foreign exchange and government securities using permissioned DeFi liquidity pools on a public blockchain. With Project Guardian, all anonymous wallets were also verified by trust anchors such as “know-your-customer” processes before trading is allowed to take place within the pool. This provides confidence to all participants involved in the transaction process.
A few weeks or is it months ago? The media sold us the news that JP Morgan performed its first "DeFi" transaction. The lie in this news coverage is that it wasn't DeFi, but a mere blockchain transaction to test out the effectiveness of whatever smart contracts were written.
Liquidity pools can be centralized, assets can be centralized, according to the quoted piece, access to these pools was based on permissioned parameters and all wallets were KYC'd. This effectively makes it a non-DeFi ecosystem, thus, the media is selling us a lot of made-up shit.
That's what happens when people just wish to publicize things to earn eyes and ears, similar to Jack Dorsey's Web5 project, how do you literally go over decades of web transitions to call out an Internet infrastructure that nobody knows if we'd even live to see?
People really gotta be careful who they follow and listen to. Lots of information needs to be fact-checked and wisdom needs to be applied on a grand scale. No more bullshiting, more education on the topics: of cryptocurrency, blockchain, DeFi, Web3, the Metaverse, and actual decentralization needs to be pushed to the masses.
Thank you and please leave a comment, your thoughts matter to me
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