What are the main crypto innovations?
It's important to look at the bigger picture of cryptocurrencies. Several innovations surged over the years, such as DeFi, NFTs and GameFi. We'll cover some of them in this module.
Introduction
The cryptocurrency sector is broader than it seems, and some like to name it Web3, in the sense of comprising more than what people usually consider that crypto and blockchain are about. WIthing the crypto and web3 enviroment, over the years new innovations surged, such as DeFi, NFT, Layer-2 solutions and GameFi. We’ll cover them in this module.
Web3
Web3 is an evolution of the internet we use today and it is a totally transparent and decentralized network, based on artificial intelligence and blockchain technology.
In other words, web3 is about modernizing the internet to give users full control over online activities. It is a remodeling of the network, which unites current precepts to new pillars with tokenization, blockchain and cryptocurrencies.
Our expectations are that in the future, the way that people interact with platforms and with each other on the internet will drastically change, and this will be due to those main crypto innovations: DeFi, NFTs, Crypto Gaming and Layer-2 solutions.
DeFi
DeFi is the name given to the set of financial services and products, such as loans, transfers and payment systems, which run on a blockchain, a kind of decentralized and immutable database. As a rule, these solutions are not controlled by intermediaries such as banks or other financial institutions.
Operations in DeFi protocols are described and executed by algorithms and smart contracts, which are self-executing computer programs. A practical example to visualize how one of them works is a loan: an individual can borrow assets from another person in a peer-to-peer negotiation. The form of transfer, amounts, interest, guarantee and all the details are previously defined in these automated contracts, and put into practice by them. There is no need to resort to a bank or other entity, with its steep fees, to intermediate the operation.
NFT
An NFT is a type of digital certificate, established via blockchain, which defines originality and exclusivity to digital goods. In a simplified way, an NFT linked to any digital item — an image, photo, video, music, message, post on a social network, etc. — makes this item unique in the world, generating scarcity around the item and opening space for a market to settle in, involving collectors and investors interested in investing real money in the acquisition of works and digital assets.
Basically, any digital item that the author or owner deems necessary to define its authorship can be linked to an NFT as a way of safeguarding its originality in anticipation of commercialization.
GameFi
GameFi is the sector that comprises games that reward the performance of their players through cryptocurrency. Usually, the payout is made through fractions of virtual currencies exclusive to the game itself. Most of these games, which are also referred to as P2E (play-to-earn), require players to make an initial investment to buy virtual characters, equipment, or land. As the player advances in the game, he can earn additional items. These virtual items can be seen as a form of investment that generates market value, which can boost their trading within the platform and create a potential source of income for users.
Layer-2 Solutions
A Layer 2 is a framework or even a secondary protocol built from an existing blockchain system. The main objective of a layer 2 is to try to solve all the difficulties of a blockchain in relation to its transaction speed, as well as scaling its capacity to perform several transfers at the same time. This also reduces your fees. Currently, scaling and lack of scalability is an issue faced by major blockchains in the market such as Ethereum and Bitcoin.
Because of this, as these primary networks are not yet capable of operationalizing and processing thousands of transactions every second, there is a huge loss for the long-term growth of the ecosystem. In this way, second layer solutions, or layer 2, have been widely adopted as a way to try to solve these problems that affect the largest blockchain networks today.
Conclusion
The whole industry is still in its early stages, but it’s amazing to watch how far we have evolved so far. DeFi, NFT, crypto gaming, and layer 2 solutions are the main examples of the disruptiveness of the crypto sector, but there is much more being built at the moment. Naturally, it will take some time for it to mature, and we’ll see new innovative technologies and solutions in the upcoming years.
Highlight
DeFi is permissionless and it is already changing the way we interact with financial services. It eliminates the fees that banks and other financial companies charge for using their services. Individuals are able to store their assets in a secure digital wallet and transfer funds in minutes.
NFT is a digital certificate, established via blockchain, which defines originality and exclusivity to digital goods, making them unique, generating scarcity around it and opening space for a market to settle in.
In crypto gaming, games reward the performance of their players through cryptocurrency, in a model also called play to earn (P2E). Those games usually require initial investment to buy characters and items, therefore generating market value.
Layer 2 platforms are created with the main goal of solving all the difficulties of a blockchain in relation to its transaction speed, as well as scaling its capacity to perform several transfers at the same time.
Main Video
Related Articles
What are the main crypto innovations?
It's important to look at the bigger picture of cryptocurrencies. Several innovations surged over the years, such as DeFi, NFTs and GameFi. We'll cover some of them in this module.
Introduction
The cryptocurrency sector is broader than it seems, and some like to name it Web3, in the sense of comprising more than what people usually consider that crypto and blockchain are about. WIthing the crypto and web3 enviroment, over the years new innovations surged, such as DeFi, NFT, Layer-2 solutions and GameFi. We’ll cover them in this module.
Web3
Web3 is an evolution of the internet we use today and it is a totally transparent and decentralized network, based on artificial intelligence and blockchain technology.
In other words, web3 is about modernizing the internet to give users full control over online activities. It is a remodeling of the network, which unites current precepts to new pillars with tokenization, blockchain and cryptocurrencies.
Our expectations are that in the future, the way that people interact with platforms and with each other on the internet will drastically change, and this will be due to those main crypto innovations: DeFi, NFTs, Crypto Gaming and Layer-2 solutions.
DeFi
DeFi is the name given to the set of financial services and products, such as loans, transfers and payment systems, which run on a blockchain, a kind of decentralized and immutable database. As a rule, these solutions are not controlled by intermediaries such as banks or other financial institutions.
Operations in DeFi protocols are described and executed by algorithms and smart contracts, which are self-executing computer programs. A practical example to visualize how one of them works is a loan: an individual can borrow assets from another person in a peer-to-peer negotiation. The form of transfer, amounts, interest, guarantee and all the details are previously defined in these automated contracts, and put into practice by them. There is no need to resort to a bank or other entity, with its steep fees, to intermediate the operation.
NFT
An NFT is a type of digital certificate, established via blockchain, which defines originality and exclusivity to digital goods. In a simplified way, an NFT linked to any digital item — an image, photo, video, music, message, post on a social network, etc. — makes this item unique in the world, generating scarcity around the item and opening space for a market to settle in, involving collectors and investors interested in investing real money in the acquisition of works and digital assets.
Basically, any digital item that the author or owner deems necessary to define its authorship can be linked to an NFT as a way of safeguarding its originality in anticipation of commercialization.
GameFi
GameFi is the sector that comprises games that reward the performance of their players through cryptocurrency. Usually, the payout is made through fractions of virtual currencies exclusive to the game itself. Most of these games, which are also referred to as P2E (play-to-earn), require players to make an initial investment to buy virtual characters, equipment, or land. As the player advances in the game, he can earn additional items. These virtual items can be seen as a form of investment that generates market value, which can boost their trading within the platform and create a potential source of income for users.
Layer-2 Solutions
A Layer 2 is a framework or even a secondary protocol built from an existing blockchain system. The main objective of a layer 2 is to try to solve all the difficulties of a blockchain in relation to its transaction speed, as well as scaling its capacity to perform several transfers at the same time. This also reduces your fees. Currently, scaling and lack of scalability is an issue faced by major blockchains in the market such as Ethereum and Bitcoin.
Because of this, as these primary networks are not yet capable of operationalizing and processing thousands of transactions every second, there is a huge loss for the long-term growth of the ecosystem. In this way, second layer solutions, or layer 2, have been widely adopted as a way to try to solve these problems that affect the largest blockchain networks today.
Conclusion
The whole industry is still in its early stages, but it’s amazing to watch how far we have evolved so far. DeFi, NFT, crypto gaming, and layer 2 solutions are the main examples of the disruptiveness of the crypto sector, but there is much more being built at the moment. Naturally, it will take some time for it to mature, and we’ll see new innovative technologies and solutions in the upcoming years.
Highlight
DeFi is permissionless and it is already changing the way we interact with financial services. It eliminates the fees that banks and other financial companies charge for using their services. Individuals are able to store their assets in a secure digital wallet and transfer funds in minutes.
NFT is a digital certificate, established via blockchain, which defines originality and exclusivity to digital goods, making them unique, generating scarcity around it and opening space for a market to settle in.
In crypto gaming, games reward the performance of their players through cryptocurrency, in a model also called play to earn (P2E). Those games usually require initial investment to buy characters and items, therefore generating market value.
Layer 2 platforms are created with the main goal of solving all the difficulties of a blockchain in relation to its transaction speed, as well as scaling its capacity to perform several transfers at the same time.
Main Video
Related Articles