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Cryptocurrency Wallet Development Realizes the Future of Payments

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Codezeros

The advancement in technology is undeniable. And everything nowadays is available at our fingertips. In recent years, the number of users investing in digital currencies is rising. Thus, Ethereum and Bitcoin always stay at the peak.

Cryptocurrencies can be stored in various wallet options. This article is going to cover everything you need to know about crypto wallet development.

What is Cryptocurrency?

Cryptocurrencies refer to a type of virtual currency that is secured by cryptography.

Almost every cryptocurrency is created on distributed ledgers and makes use of decentralized networks that are further integrated with blockchain wallet development technology.

How do cryptocurrency wallets function?

  • The crypto transactions are stored in a blockchain network by the wallet that cannot be altered.
  • When a user sends cryptocurrencies to another user, he is transferring the ownership of the coin to the receiver.
  • It consists of both private and public keys that are associated with the currencies.
  • Only if the private key matches the public key, the users are allowed to make a transfer of their digital coins.
  • The private key is used for validating the transaction, whereas the public key is utilized to receive the funds.

Types of cryptocurrency wallets:

The types of cryptocurrency wallets are described below:

  • Desktop wallets:

One can easily download desktop wallets on a PC or laptop. Most of them are secure, and the security will not be compromised until there is a cyberattack.

  • Virtual wallets:

Based on the cloud, virtual wallets are accessible from any location. With the implementation of blockchain technology, it is safer and convenient but is still vulnerable to cyberattacks.

  • Mobile wallets:

Through a mobile app, mobile cryptocurrency wallets can be used. Several retail stores accept payments through this type of wallet.

  • Hardware wallets:

These wallets do not store any private keys of the users online. Instead, the keys are stored on a hardware drive.

  • Paper wallets:

This type of wallet is considered to be the most secure one. It generates printable private and public keys. It can handle easy fund transfer, and it has a QR code facility for user convenience.

Current Cryptocurrency trends in the market:

The first cryptocurrency was bitcoin. And the ones that are developed after bitcoin are often called Altcoins, which serve as the best alternative to fiat currency.

The fluctuation of monetary value, investment growth in the capital, cross-border remittance, and transparency have drastically influenced the market growth.

The leading wallets in 2021:

According to popular providers of wallet development services, Cryptocurrency wallets can be divided into two major categories, namely,

  1. Hardware wallet:

The hardware wallets for cryptocurrency are:

Ledger Nano S: It is a super-secure hardware wallet for cryptocurrency. It has its OS called BOLOS and features 2-feature authentication.

Trezor One: Modern cryptography is integrated with Trezor One. It also uses 2-factor authentication for transaction authentication.

2. Software wallet:

The software wallets for cryptocurrencies are:

Coinbase: It is efficient in creating open financial infrastructure. It has over 35 million users currently.

Gemini: It is accessible via both PC and mobile. Gemini can track real-time cryptocurrency prices. The users can set price alerts to get immediately notified during price fluctuations.

Steps for development of cryptocurrency wallet:

Follow the below processes for cryptocurrency wallet development:

3. Define your cryptocurrency app type:

As there are already existing concepts, you do not need to reinvent. Just learn from your competitors, speed up your development process, and define the crowdfunding app concept.

4. Evaluate the existing market scenario:

It is not time for you to analyze the market. Perform a SWOT analysis for your cryptocurrency wallet development to overpower your competition.

5. Design UI/UX:

Identify user flow and create user-friendly information architecture. And focus on making a high-quality UI.

6. Develop technical architecture and backend:

Aspects like database, UI, service tools, and workflow needs to be considered. After the technical architecture is ready, opt for backend development. Create internally and bind external APIs to build a robust backend.

7. Frontend development:

Work on making a responsive design, and make sure that the user experience is top-notch. The most crucial thing about creating a frontend is that it needs to be reliable.

8. Testing:

Finally, test the app, and compare it with the original requirement document. If any errors or bugs are found, it is fixed by the development team. And the QA team verifies it, and then only it is released.

The necessary features for cryptocurrency wallets:

The must-have features are:

  • User account management
  • QR-code scanning
  • Trading and exchange cryptos
  • Efficient security
  • Currency management
  • Push notifications
  • Seamless onboarding

Conclusion:

The dramatic rise of Bitcoin influenced the global monetary system. And this market will continue to grow and will be the future of digital payments.

If you are unfamiliar with cryptos, you must not commence with the app development hectically. And you must take help from a professional cryptocurrency wallet development company to develop highly secured wallets.

Cryptocurrency Wallet Development Realizes the Future of Payments

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A Comprehensive Guide on How dApps Differs From Traditional Apps

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A Comprehensive Guide on How dApps Differs From Traditional Apps

If you are new to the concept of dApps and wondering how such apps differ from regular mobile applications, you have landed on the right page. This article introduces what decentralized applications are and explains how they differ from regular apps.

Table of Contents 

  • What are dApps?
  • dApps Over Regular Apps 
  • Why Ethereum for dApps?
  • Concluding Lines  

What are dApps?

Decentralized applications, also known as dApps, are a new type of software application, or you can say they are digital applications that, instead of running on a single computer, run on a peer-to-peer blockchain network. 

In other words, they are open-source application software that use smart contracts to run transactions on a peer-to-peer network. The best thing about these applications is that they are not owned by a central authority and cannot be shut down by anyone. 

Want to build your own dApps and become a Certified Blockchain Developer? Get started today with Blockchain Council. 

dApps Over Regular Apps 

There are some key differences between a dApp and an app. Let’s figure it out. 

  • Centralized Vs. Decentralized 

The basic key difference between each of them is mainly because of the underlying principle of decentralization. Unlike traditional apps that are governed by centralized controlling authority, decentralized applications run on a peer-to-peer blockchain. 

  • Trustable 

Decentralized Applications are trustable among users, and this is because users get control and ownership of their data and assets. But in terms of ease of use, regular apps are more user-friendly. 

  • Cost of Development 

While developing a regular app, one has to take into consideration various factors such as the cost of cloud server fees, maintenance fees, and others. But in the case of dApps, Blockchain Developers need not worry about such factors as dApp cost includes development, deployment, and even upgrade.

Compared to the traditional applications, the speed of dApps are comparatively slow. According to Blockchain Developers, such apps can process only around 15 transactions per second. But as the dApp industry is booming and showing no sign of slowing down, it is clear that soon it will be able to scale up thousands of transactions in the years to come. 

  • Security 

When it comes to security, Blockchain-based apps are more secured compared to regular mobile apps. Since these apps are decentralized, they are tamper-proof, and the records stored are unalterable. Here it is important to note that the wallet address of users and their interactions are stored when someone uses a dApp which can be seen by everyone. Still, they are secured. Also, they are immutable from hacking and other potential destructions. 

  • Usage Cost

As we all know, most of the regular apps are free, which means users need not pay any amount for using that app. But in the case of dApps, users have to pay a small fee every time they use a decentralized application. If you are wondering what determines the cost while using such apps, remember that the more complicated an app is, the higher the fee. 

Why Ethereum for dApps?

Decentralized applications are generally powered by Ethereum Blockchain. In other words, we can say that Ethereum currently dominates dApp development, and there are several reasons for that. 

The first and foremost reason is that Ethereum implements a development interface that reduces programming time and instantly launches projects. 

Moreover, with the integration of development kits, application templates, and MetaMask, Ethereum Blockchain provides a developer-friendly experience that has proven efficient in attracting new projects and large communities.

Want to learn more about Ethereum and become a Certified Ethereum Expert? Wait no more. Get started today with Blockchain Council. 

Concluding Lines 

This has led us to the end of the discussion, and from the above discussion, it is clear that dApps outstands when compared to regular mobile apps in terms of transparency, reliability, flexibility, and scalability, and these factors are stimulating the global DApps Market.

If we look at the statistics, it was estimated that the market size of dApps was valued at USD 10.52 Billion in 2019 and is expected to reach USD 368.25 Billion by the year 2027 at a CAGR of 56.1%. The rising demand for fast transaction processes and the advantages of DApps in terms of transparency, reliability, flexibility, and scalability are spurring the global dApps market.

Since dapps are new innovative technologies, learning how to build dApps on Ethereum can bring tremendous career opportunities in the Blockchain space. If you are interested in learning how to build dApps from scratch, you can get enrolled in Blockchain Council and become a Certified Blockchain Developer.

To get instant updates about Blockchain Technology and to learn more about online blockchain certifications, check out Blockchain Council. 

A Comprehensive Guide on How dApps Differs From Traditional Apps

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A detailed history of blockchain: From the Establishment to Broad Adoption

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A detailed history of blockchain From the Establishment to Broad Adoption

Blockchain has gotten an ample amount of appreciation in the most recent couple of years, with the potential to come across as an extraordinary power to transform businesses. Blockchain technology is a computerized record of an action that is copied and conveyed across the whole organization of the blockchain platform through computer networks. Sounds confusing, isn’t it? Truth to be told, Blockchain is much easier to understand than the above description.

For understanding the concept, it is feasible to look back at its historical background and learn about its origin to significant turns of events and innovations. Bits of knowledge into the background of Blockchain will assist us with addressing these queries like the exact meaning of the term,  working environment, problems it can solve, and where it can be implemented. All these insights will help us to place the right expectations for its future.

Table of content

  • What exactly is Blockchain?
  • When did the Blockchain first appear?
  • Who is behind blockchain technology?
  • How is Blockchain created?
  • Identifying a suitable Use-case
  • Selection of Suitable Consensus protocol
  • selection of a suitable platform
  • Node designing
  • Designing the Blockchain parameter configuration
  • APIs
  • Building admin and user Interfaces
  • Adding smart technology
  • Closing Thoughts.

What exactly is Blockchain?

A blockchain is a disseminated network that comprises computer systems associated with the Internet, which all together keep the account of transactions. In the Blockchain, one record is dispersed and protected across the system. Each computer in the group approves the exchanges. However, nobody has power over the network, not like various clients functioning in a centralized network. 

A blockchain incorporates a sequence of blocks, which are information units used to store value-based data of the organization. To add a block into a blockchain, these steps ought to occur:

  • When an exchange is performed, then it should be confirmed by a group of computer networks. The exchange should be compiled in a block; after getting approval from the network group. The digital signature of the sender and the receiver and the dollar’s value has to be stored in a block. 
  • A block should be given a hash to separate it from different blocks. This block additionally contains data of the hash of the newest added block into a blockchain. When hashed, this block can be put into the Blockchain.
  • After the inclusion of a new block in the Blockchain, the complete information of this exchange will be public, and any user in the network can explore this exchange data, for example, who sent it? Who received it? Who added this exchange to the block? When did the exchange occur? And so on. The information is apparent and auditable yet not editable.

A block is only digital data. A “chain” is characterized as a common information base. In this way, when we say Blockchain – we intend to discuss the digital data which is kept in a public data set.

When did Blockchain first appear? 

The very first appearance of Blockchain was seen in 2008. It was introduced by an individual named ‘Satoshi Nakamoto.’ Nakamoto improved the blockchain structure effectively, utilizing a Hashcash-like strategy to keep records of time and date of added blocks without expecting them to be endorsed by a central party and embedding boundaries to balance out the rate at which blocks were to be added to the chain. Next year, this blockchain structure was recognized as a central part of the cryptocurrency bitcoin, where it acts as the public record for all exchanges carried on the network. 

In August of 2014, the size of stored records of all exchanges that have happened on the bitcoin blockchain network filled up to 20 GB. In January 2015, the size had reached nearly 30 GB. This size expanded from 50 GB to 100 GB between January 2016 to 2017. While reaching halfway to 2020, this record size exceeded 200 GiB.

Who is behind Blockchain technology?

It is essential to learn about the historical background of Blockchain for Blockchain supporters and Blockchain prospects. Thus, to help readers to comprehend the Blockchain advancement, let us learn the  history of this technology:

1991-2008: Creation Period of  Blockchain Technology

Blockchain emerged in 1991  when W. Scott Stornetta and Stuart Haber deliberated what the world has come to know as a “Blockchain.” Their early work included shaping a cryptographically secured blockchain where nobody could alter timestamps of records. 

In 1992, they updated their technique to consolidate Merkle trees that improved proficiency hence providing the assortment of more reports on a solitary block. Nonetheless, in 2008, the term “Blockchain” began to acquire importance when Satoshi Nakamoto ingrained his idea of Blockchain in the blockchain space. 

Satoshi Nakamoto is credited as the master of blockchain innovation. There is not much knowledge about Nakamoto as individuals speculate he could be a single person or a group that molded Bitcoin, the primary application of digital roster technology.

How is a Blockchain created?

Here are steps that are needed to create a blockchain:

Step 1: Identifying a suitable Use-case

There are three use-cases where blockchains do very well:

  • Data Authentication and Verification: It focuses on encryption, inflexible storage and digital signatures, creation of private and public keys, and verifying digital signatures.  
  • Smart Asset Management: This focuses on disbursement, revenue, trade, bond, and retirement. In crypto, real-world properties are represented in the form of a token, for example, land, infrastructure, gold, silver, oil.
  • Smart Contracts: This focuses on trade between dealer and buyer with smart contracts.

Step 2: Selection of Suitable Consensus Protocol

Depending on your requirements, you need to choose the right consensus protocol among:

  • Deposit based consensus
  • Proof of stake
  • Delegated Proof of Stake.
  • Derived PBFT
  • Byzantine fault-tolerant
  •  Federated Byzantine Agreement
  • Redundant Byzantine Fault Tolerance
  • Federated consensus
  • Proof of Elapsed Time
  • Simplified Byzantine Fault Tolerance
  •  Round Robin

Step 3: Selection of a Blockchain Platform

This depends on your choice of consensus protocol. Many of them are cost-free and open source. Here are some examples:

Ethereum, Hyperledger Fabric, Quorum,
HydraChain, Stellar, Hyperledger Iroha,
Open chain, Hyperledger Sawtooth Lake, and many more.

Step 4: Node designing

Blockchain systems can be designed as private/public,  permission-less as well as with permission, or even hybrid. 

Another important factor to be considered at this step is whether the nodes are running on-premise or in the cloud. Also, the selection of operating systems and tasks related to hardware configuration such as processors, and memory and disk size is to be done in this step. 

Step 5: Designing the Blockchain Parameter Configuration

Usually, blockchain platforms require a thoroughly plotted configuration for elements like permissions, atomic trades, key management, asset issuance, multiple signatures, address formats, hand-shaking, etc.

Step 6: APIs

Most platforms offer pre-built APIs, while others don’t. The issues that you’ll need APIs for are: 

  • For developing keys and addresses.
  • Conducting auditable processes.
  • Performing data verification by using hash and digital signatures.
  • For holding data and its recovery.
  • Managing smart-asset, I.e., distribution, bond, donations, business, etc.
  • Creating smart contracts.

Step 7: Building admin and user Interfaces

At this step, you’ll select the programming languages. You’ll also have to pick external databases and servers.

Step 8: Adding smart technology 

Boost the potential of your Blockchain solution with the addition of Artificial Intelligence (AI), cloud, data analytics, biometrics, machine learning, and bots.

Closing Thoughts

The Blockchain provides amazing advancements in security, decentralization, transparency, and unchangeable data. These qualities make it a perfect tool for future applications. 

It has marked its territory in many industries, and many more yet have to embed it.

Learn more about blockchain technology and take up a suitable blockchain course at Blockchain Council.

A detailed history of blockchain: From the Establishment to Broad Adoption

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5 Applications for Blockchain in Your Business

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Codezeros

Cryptocurrency has been through a roller coaster ride, i.e., with ups and downs ever since Bitcoin was introduced. And since the introduction of Bitcoin, it is always referred to as something that is specially meant for black market activity and endless possibilities of something wicked in the present times. But then comes the Blockchain, which is the public ledger that records every bitcoin transaction.

5 Applications for Blockchain in Your Business

After the advent of Blockchain, every blockchain development company around the globe is trying to evolve more so that they can firmly stand as an alternative to traditional banking. It has now got the potential to have a centralized banking setup and also can bring a new set of transaction methods, which can change the way we do banking nowadays.

So, let’s find out the 5 best blockchain applications for business.

1. Smart Contracts

The term has a long history, but in recent years it is under the mouth of many technologies since it was released by the Ethereum Project in 2013. The whole Ethereum project comes in the form of a decentralized platform, which has smart contracts applications that are automated to run without having downtime, censorship, fraud, or third-party interference.

Many people have even suggested that smart contracts are pre-programmed algorithms that hold the capability to carry out the terms of any contract. Therefore, with smart contracts, businesses can bypass regulations and can reduce the cost of the subset.

A good example of smart contracts can be found in companies like Slock, which is also an Ethereum based platform. Through it, the company can rent a bicycle to the customers. The cycle gets unlocked to use only when both parties agree with the terms and conditions. Thus, making it a worthy Blockchain app for business development.

2. Cloud Storage

Another application on the list that provides blockchain development services is Cloud Storage. In 2021, many businesses or even general users are taking advantage of it. Storing things on the cloud makes it easier for any person to access them. Thus, they don’t have to carry external, tangible pen drives or hard drives everywhere they go.

For instance, Storj, a company, is also offering cloud storage and thereby decreasing the dependency. Even the founder of the company believes that the age of hard drives is long gone. People can now store 300 times more data and files than they can on an average hard drive.

Many people foresee that spending over 2 billion on cloud storage can not only deliver revenue to most users but will also reduce the cost of storing data in hard drives.

3. Supply-Chain Communications

The creation and the marketing of a product don’t involve only a single brand in the process, and therefore there are several brands involved in the process. There is a chain of suppliers who are involved in the final output of a product by a brand (e.g., graphite for pencil).

The biggest pre-existing problem is that if a supplier fails to provide components or funds at the right time, the primary final brand gets the backlash. Therefore, this Blockchain app development helps in simplifying the issue.

It helps in proactively delivering digital permanence and audit-able records that can easily be audited and scrutinized. Companies like Provenance and SkuChain are already on the verge of solving such issues.

4. Electronic Voting

According to BitShares, which is a worldwide distributed database, Delegated Proof of Stake (DPOS) has emerged as the most compatible and fast consensus model available, which is well-organized, highly distributed.

DPOS fairly resolves consensus issues by leveraging the power of stakeholder approval voting. Through the elected delegates, it can schedule fees and tweak the transactions. Its consensus protocol helps in safeguarding the users from getting involved in regulatory interference.

5. Paying Employees

Most of us already know that Blockchain has its connection with cryptocurrency, and hence it can be used to compensate the employees. Many people in the past have pointed out that if a company pays internationally regularly to its clients or employees, it will result in transaction fees and added time.

So, here Bitcoin can be a cost-saver, as with payroll services like Bitwage, you can save money from transaction fees, and the transfer process is also faster. As it takes much time to move funds from banks to banks, therefore this prolonging process can be cut short.

Even the founder of Bitwage has stated that chronologically doing transactions helps in seeing where the money is going. This process not only saves time for the employers but also the employees get their wages faster.

Conclusion

Now, as the expert teams of top-notch Blockchain app development companies provide enhanced security, it has almost made banking tougher to hack. So, you can take the help of Blockchain to upgrade your business app to the next level.

5 Applications for Blockchain in Your Business

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A Beginner’s Guide to Decentralized Applications

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A Beginner's Guide to Decentralized Applications

Are you a Blockchain enthusiast? Wondering what dApps are? Want to build your own dApp and get started as a Blockchain Developer? Well, we have got you covered. Before you start making apps, let’s deeply understand what these applications are.  

Table of Contents 

  • What are dApps?
  • How dApps Differ From Traditional Apps?
  • dApps and their Characteristics 
  • Ethereum dApps That You Can Use Now
  • The Verdict 

What are dApps?

Decentralized Applications, also known as dApps, consists of back-end code that runs on a P2P decentralized network. dApps provide features similar to those provided by traditional consumer apps, but they utilize blockchain technology to give consumers greater power over their data by removing the need for centralized data management, thereby rendering the service “decentralized.”

In other words, they are open-source application software that use smart contracts to run transactions on a peer-to-peer network.

Sounds interesting? Get started today as a Blockchain Developer!

How dApps Differ From Traditional Apps?

Before you start developing your own application, let’s understand how these decentralized applications differ from traditional ones.  

Centralized Vs. Decentralized 

The basic key difference, unlike traditional apps (governed by centralized controlling authority), dApps run on a peer-to-peer blockchain network. 

Trustable 

These applications are trustable among users as users get complete control and ownership of their data and assets.

Cost of Development 

When it comes to the development cost, regular apps have to take into consideration various factors such as cloud server fees, maintenance fees, and others. But in dApps, Blockchain Developers need not worry about such factors as dApp cost includes development, deployment, and even upgrade.

Speed 

In terms of speed, regular apps outperform dApps as decentralized applications can process only around 15 transactions per second. 

Security 

Undoubtedly, Blockchain-based apps are more secured. This is because these apps are tamper-proof, and the records stored are unalterable. Also, they are immutable from hacking and other potential destructions. 

Usage Cost

There is no cost of using regular apps. But for using decentralized applications, users have to pay a small fee every time. Here it is crucial to note that usage cost depends on the complexity of the app. 

dApps and their Characteristics 

As we have understood what dApps are and how they differ from the traditional apps, let’s explore their key characteristics. 

  • Works on the underlying technology, Blockchain.
  • dApps are open-source, which means code is public, and hence anyone can copy and audit it.
  • They are decentralized, meaning they are not governed by any central authorities like Facebook, Airbnb, etc. Thus, no central authority can stop users from using the app or doing what they want. 
  • Such applications use Ethereum smart contracts, which automatically execute when the desired conditions are met. 
  • Most importantly, these apps are global, meaning anyone around the globe can publish or use these dapps.

Ethereum Apps That You Can Use Now

Before exploring the apps, it is crucial to note that the majority of the dApps are built on Ethereum Blockchain, and there are many reasons for that. The first being Ethereum Blockchain implements a development interface that reduces programming time and instantly launches projects. Ethereum also offers a developer-friendly experience with the inclusion of creation kits, application models, and MetaMask, which has proved effective in attracting new projects, vast groups, and large communities.

There are hundreds of dApps, each having different purposes. For instance, if you want to mint, buy, or trade non-fungible digital art, you can use Zora, Foundation, Cent, MakersPlace. If you want to pay musicians directly for their work, you can use Catalog, Audius, and other similar apps. For finance-related activities such as sending, receiving, borrowing, earning interest, streaming funds, you can use Compound Finance, Aave, Pool Together, Dharma, InstaDApp, and others. For exchanges and peer-to-peer options for buying, storing, and trading cryptocurrencies, one can use 1inch, AirSwap, ForkDelta, and others.

The Verdict 

The landscape of dApps is rapidly evolving, making Ethereum the platform of choice for Blockchain developers. Its potential indicates that we can expect to see exciting new functionalities and use-cases for blockchain technology shortly. Apart from Ethereum, Cardano, Lisk, QTUM, and NEO are also popular for DAPP development.

According to statistics, dApps’ market size was valued at USD 10.52 Billion in the year 2019, and now it is expected to reach USD 368.25 Billion by 2027 at a CAGR of 56.1%. If you want to develop your own dApp, all you have to do is enroll in Blockchain Council and become a Certified Blockchain Developer. 

To get instant updates about Blockchain Technology and to learn more about online blockchain certifications, check out Blockchain Council.

A Beginner’s Guide to Decentralized Applications

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How NFTs, DeFi and Web 3.0 are intertwined

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While blockchain itself provides the technology constructs to facilitate exchange, ownership and trust in the network, it is in the digitization of value elements where asset tokenization is essential. Tokenization is the process of converting the assets and rights to a property into a digital representation, or token, on a blockchain network. 

Distinguishing between cryptocurrency and tokenized assets is important in understanding exchange vehicles, valuation models and fungibility across the various value networks that are emerging and posing interoperability challenges. These are not just technical challenges, but also business challenges around equitable swaps.

Asset tokenization can lead to the creation of a business model that fuels fractional ownership, the ability to own an instance of a large asset. While discussing asset tokenization in a previous article, I also mentioned the value of an instance economy in democratizing finance, commerce and global access, as well as in creating a broader global marketplace at a scale never before seen.

With digital assets and their fungibility in a blockchain ecosystem, there are various drivers of valuation. These include: 1) tokens based on crypto economic models that are driven by supply and demand, and the utility of the network; 2) nonfungible tokens, or NFTs, which have an intrinsic value such as identification, diplomas and healthcare records — essentially, tokens that are simple proof validations of the existence, authenticity and ownership of digital assets; and 3) fungible tokens that are valued on various bases, such as the sum total of economic activity in the network (cryptocurrency), its utility (smart contracts and transaction network processing), assigned values (stable coins and security tokens), and so on.

In this article, I address the complex issue of the hyperbolic and rapid rise of NFTs, after a similarly meteoric rise of decentralized finance, or DeFi, creating amazing innovations — with immense promise of democratization, new business models and global marketplaces with global access — all fueled by the basic premise of decentralization and fundamental constructs of tokenization and wallets. While NFTs may be characterized as one-of-a-kind cryptographic tokens with some intrinsic value to a holder or to a market (art, collectibles), the NFT movement is indicative of a larger token revolution that will not only fuel massive innovation and growth in Web 3.0 protocols but also test the resolve of the DeFi movement, along with its ability to intersect and provide platforms and an exchange vehicle for all token types.

Growth in Web 3.0 protocols

The first two generations of web protocols were largely about disseminating information and connecting people. They fueled a massive growth in information and collaboration, and did wonders for connecting the world. However, those web protocols were never designed to move things of value. Also, as the Web 2.0 era reached its fullest potential, vulnerabilities such as “fake news” and the “batched relay” of the movement of assets via a series of intermediaries emerged. Threats to the commerce and financial infrastructure of the system risk destabilizing it.

Web 3.0 promises to safeguard all things we value: information, truth and digital assets — both fungible and nonfungible. Whereas Web 2.0 was driven by the advent of social, mobile and the cloud, Web 3.0 is largely built on three new layers of technological innovation: edge computing, decentralized data networks and artificial intelligence.

The growth of NFTs has not only empowered the ability for artists, skilled professionals and entrepreneurs to encapsulate innovation in a tokenized form but has also fueled the democratization of the platform as one of the promises of blockchain technology. The underlying infrastructure includes decentralized storage technologies, efficient consensus protocols, off-chain computing, and oracle networks to provide connectivity and validation to existing systems.

Collectively, the Web 3.0 set of technologies envisions a connected, trustless, accountable network for efficiently delivering value, thus crafting an infrastructure for things of worth. NFTs represent both transferable entities and nontransferable tokens that we value. The latter include things such as our identification, healthcare records and passports, things that represent us and allow us to participate in the digital economy with our own unique, digital identities.

As we dare to envision a shift toward a world with decentralized control, governance based on distributed technology that challenges every business model, and governance structure built upon centralized business frameworks, we do have to ponder some things. Not only the shift itself, but the motivation, incentive and monetization elements that fuel and power the economic infrastructure to move things that have value — thereby keeping up with our changing perception and subsequent realization of that value.

Intersecting with finance — DeFi

DeFi is the movement in the blockchain applications space that leverages decentralized network technology to disrupt and force a transformation of old financial products into trustless, transparent protocols, facilitating digital value creation and dissemination with few to no intermediaries. It is widely understood and accepted that — due to new synergies and co-creation via new digital interactions and value-exchange mechanisms — blockchain technology lays the foundation for a trusted digital transactional network that, as a disintermediated platform, fuels the growth of marketplaces and secondary markets.

While DeFi aims to deliver the promise of finance democratization, NFTs test the resolve of DeFi by delivering a competitive yet inclusive asset class, plus avenues to provide a medium of exchange, fungibility by other fungible asset classes, and liquidity to a traditionally illiquid market.

Asset classes resulting from DeFi protocols and NFTs avail themselves of the advantages of fractional ownership of the assets, blurring the lines between asset classes and using constructs like digital wallets as a receptacle for them. This is all supported by underlying layers of Web 3.0 that provide security and availability via decentralization, as well as trust and immutability via consensus, extending these principles to basic computer infrastructure like storage and interconnect.

Commercialization of Web 3.0 protocols, which manifest as fungible utility tokens, further blurs the lines with diverse financial innovation products introduced by DeFi (such as base assets and derivatives), products that are also tokenized. So, while decentralization is the underlying theme — and the wallet and the token are fundamental constructs — these blurring lines are quite profound.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Nitin Gaur is the founder and director of IBM Digital Asset Labs, where he devises industry standards and use cases and works toward making blockchain for the enterprise a reality. He previously served as chief technology officer of IBM World Wire and of IBM Mobile Payments and Enterprise Mobile Solutions, and he founded IBM Blockchain Labs where he led the effort in establishing the blockchain practice for the enterprise. Nitin is also an IBM Distinguished Engineer and an IBM Master Inventor with a rich patent portfolio. Additionally, he serves as research and portfolio manager for Portal Asset Management, a multi-manager fund specializing in digital assets and DeFi investment strategies.

How NFTs, DeFi and Web 3.0 are intertwined

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