Blockchain, probably the most head-turning invention after the internet, has given birth to many other technologies. From cryptocurrencies to non-fungible tokens (NFTs) as well as smart contracts, blockchain has spread its wings quickly during the last decade. Throughout the last few years, all of the technologies stemmed from blockchain have found their way into a variety of industries, helping to digitally transform the way people do business.
Blockchain is a peer-to-peer connection-based network. It has the ability to record transactions and is often referred to as a digital ledger. This technology has made the decentralization of finance possible, because the transactions or management of cryptocurrency are not under any particular government or centralized entity. This gives the consumer transparency and anonymity.
What is DeFi?
The upcoming years are slated to play a vital role when it comes to blockchain-driven spaces such as digital contracts, cryptocurrencies, and NFTs amid the rise of Web3. A large chunk of youngsters have already started to utilize cryptocurrencies and fintech facilities, proving the efficiency of these tools.
Although, just like any investment portfolio, it is tough to keep exact track of crypto investments. Here’s where a crypto tracking tool comes into the picture. Such tools can also help you with multiple crypto exchanges and platforms while assisting you with tax and DeFi transactions.
What are Smart Contracts?
Smart contracts are digital records of transactions or contractual agreements between two or more parties. The first and foremost feature of these digital contracts is that they eliminate the need for an intermediary between the concerned parties, such as a lawyer or firm.
The technology behind smart contracts is based on coding languages like Solidity and Vyper. Apart from storing digital records of buying or selling cryptos, smart contracts can be used to secure healthcare records as well.
Another feature of these contracts is that, once stored, a transaction can never be altered or harmed, ensuring its security. Thus, smart contracts have the ability to transform many industries with their efficiency and transparency.
Benefits of Using Smart Contracts in DeFi:
● Contrary to traditional ones, smart contracts are way faster and hassle-free.
● They’re more accurate and remain untouched, due to their high level of security
● They are more cost-effective and transparent
How are Smart Contracts Used in DeFi?
Smart contracts also help to perform treasury management in the Defi space. Treasury management, when handled with the help of smart contracts, can be automated and transparent; it is the management of funds held by the decentralized autonomous organization (DAO).
DAO treasury management takes care of the disbursement of funds within the rules and regulations. It generates funds from its treasury using smart contracts and blockchain technology. One of the most prominent benefits of using a DAO is to be able to achieve a minimum rate of errors. DAOs are the recent outcome of smart contracts and follow a community-driven model.
In a nutshell, smart contracts are the way of the future within the finance world. Not long from now, we will likely be seeing the usage of smart contracts, not just for cryptocurrencies, but also for other transactions. A handful of industries where you can expect smart contracts to make a significant appearance will be trading, insurance, real estate, voting and supply chain management.
Blockchain itself, on the other hand, continues to march towards growth and expand its reach as well. Reportedly, China is working to upgrade its blockchain standards by the year 2025. Meanwhile, XRP’s price rise has turned many heads in recent weeks. It will be interesting to see how blockchain and DeFi will digitally transform the fintech world within the next few years.