Blockchain Archives - MaxinAI Decentralized Finance Disrupts Traditional Banking
Decentralized Finance DeFi

Decentralized Finance Disrupts Traditional Banking

Decentralized Finance Disrupts Traditional Banking

Decentralized finance or DeFi is a blockchain-based financial system that uses cryptocurrencies and blockchain to manage financial transactions instead of relying on central financial intermediaries such as banks, brokerages, exchange houses, etc.

DeFi is growing at a very fast phase. The industry has reached $ 100 billion and its users are over a million now, which shows people’s motivation and enthusiasm to participate in such a system.

With such a surge in popularity and adoption rate, people are wondering if DeFi may be the next big thing in global finance. In this article, we’ll take a look at the reasons why decentralized finance can disrupt traditional banking.

Accessibility 

Unlike traditional banking, Decentralized Finance offers users simplified and easier access to banking services. It also removes barriers by eliminating the need to share personal information before accessing services.

For example, with the traditional banking system, a person in need of a loan would have to go through a bureaucratic process and waste a lot of time, however, in the case of DeFi, such operations require only several clicks and are accessible from anywhere and at any time. This approach not only makes the process seamless but also affordable, giving users full control of their assets.

Transparency

Because DeFi is powered by blockchain technology, all transaction data is transparent and available to everyone. Such auditable nature of DeFi allows parties to properly assess risks and inspect portfolios

Therefore, DeFi’s open source infrastructure is always available for audit, with every transaction recorded on the blockchain. This not only serves as an important foundation for financial markets but also plays an essential role for investors.

By understanding what types of transactions are taking place, DeFi provides its users with a high level of trust, a sense of security and authenticity.

Exchange  

DeFi simplifies the exchange process as it involves peer-to-peer transactions without the need for a middle man or middleman. DeFi platforms are equipped with machine learning algorithms that help detect fraud and identify other risk factors.

With the help of smart contracts and analysis on loan sources, credit levels, etc., DeFi platforms speed up the exchange and lending process between two parties. That’s why DeFi exchange and lending is one of the fastest-growing use cases in the industry.

Innovation

Decentralized finance is one of the most innovative industries. Built on blockchain technology, DeFi solutions are innovative by nature. However, in addition to that the industry is constantly looking to expand its capabilities and offerings with innovative solutions.

Exactly such groundbreaking thinking made DeFi a perfect use case for doing everything from lending to insurance. And as the decentralized finance becomes more attractive to large investors and businesses, we are more likely to see more innovative and complex uses of this space.

Conclusion

Decentralized finance is receiving increased recognition from users, as well as potential partners, such as international payment providers. It has grown so much that even traditional financial institutions recognized the potential of DeFi.

Although DeFi is still considered a new and experimental solution, everyone agrees that DeFi is here to stay and has the potential to disrupt traditional banking. 

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Blockchain Archives - MaxinAI Non-Fungible Tokens – What Are They and How Are They Used?
Non-fungible tokens

Non-Fungible Tokens – What Are They and How Are They Used?

Non-Fungible Tokens – What Are They and How Are They Used?

Remember the artwork of banana duct-taped to a wall that sold for $ 120,000? It created quite a fuss as such a simple and arbitrary combination cost the buyer huge amounts of money, considering that the banana would rot in a matter of days.

However, 2021 took it a step further. A digital version of banana & tape sells for 80 ETH or $ 171,813. Such digital works are known as NFTs, a hot topic right now as some of NFT sales surpass the $ 550,000 mark. 

So let’s understand what NFTs really are and why everyone is talking about them right now.

What is an NFT?

Non-Fungible Tokens

NFT stands for Non-Fungible Token. As the word itself dictates, non-fungible means that an asset is unique and cannot be substituted.

A painting, a house, a copyright or a patent are examples of non-fungible goods, as they have unique attributes that differentiate them from other items in the same class of goods. 

Therefore, NFTs are certificates stored on a blockchain that represent different assets that cannot be copied (because their ownership is tracked via blockchain). 

NFTS  can represent both types of assets, digital (a video or audio) and physical (a sculpture or a painting).

What benefits does an NFT offer?

  • Liquidity 
Money

The fact that physical assets can be tokenized is the reason why NFTs offer more liquidity.

Let’s say a team entered a competition and won a rare sculpture. Since there is a single physical price for multiple team members, dividing it becomes tricky.

Selling the sculpture and splitting the money is one option, but what if the value of the prize is expected to increase in the near future?

This is where NFT can make things simple. Team members can link a digital certificate (NFT) to the asset and own equal parts of the prize, making their asset more liquid and flexible. 

  • Tradability 

One of the most important features and the reason NFTs are popular is their ability to freely trade on open markets. NFTs can be traded outside of their original environments and transferred from a closed economy to an open market.

  • Programmability

Another feature of NFT is that they are programmable. They can be programmed to respond to specific commands and triggers. 

One of its examples is CryptoKitties, a blockchain game that allows players to purchase, collect, breed and sell virtual cats.

The game has breeding mechanics encoded directly on its tokens. This means that each cat in the game has a unique appearance and when breeded with another cat, a new and unique kitten will appear that will combine the genes of its parents.

What are the use cases for NFT?

  • Virtual housing 
Virtual housing nft

Buying a property has always been considered a great investment option, however, what if it’s digital? Yes, you read it right – digital. A first virtual house has been purchased as an NFT for the sum of more than $ 500,000.

Virtual reality (VR), a technology initially popular in the video game industry, has seen advancements in many different sectors and real estate is one of them.

Many believe that in the near future, people will live in a world powered by VR and AR consisting of digital buildings, vehicles and pets. 

In fact, there is already a place called Genesis City, a virtual city powered by Ethereum where people can buy their digital land and build infrastructure. In such situations, NFTs are a great way to claim ownership of your virtual properties.

  • Ownership verification and beyond 

Not only can you easily verify ownership of assets with NFT, but you can also get a complete history of the asset, such as provenance, previous owners, etc.

Many luxury brands are taking this opportunity to vary the authenticity of high-priced assets. For example, LVHM, a luxury good company, is planning to introduce blockchain tracking authenticity technology, where buyers can easily access the complete history of a luxury good.

  • Identity protection

Non-Fungible Tokens

Identity theft is a big problem and can lead to devastating results like emptying your bank account, damaging your credit, or even getting you wrongfully arrested.

NFTs are a perfect solution to prevent these types of problems. It can digitize all the physical documents like IDs, medical reports, certificates, etc. and free a person from the burden of carrying them around all the time.

Such a use case is still in an early stage, however, considering the speed of advancement of NFT technologies, there is a high probability that soon we might see it widely used.

Conclusion 

NFTs may not be that popular yet, but the industry is certainly on the rise. With all the benefits and advantages that NFT technology offers, it is not surprising that its range of applications has progressed from simple gaming concepts to more advanced use cases such as digital identification.

As Non-Fungible Tokens gain more promotion from famous people like Elon Musk, the technology is likely to penetrate more industries and be used more widely.

So let’s wait and see what new applications can developers and the cryptocurrency community find for NFTs.

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Blockchain Archives - MaxinAI The Potential of Merging AI and Blockchain
Potential of AI and Blockchain

The Potential of Merging AI and Blockchain

The Potential of Merging AI and Blockchain

Two of the hottest topics on the internet right now are blockchain and artificial intelligence. We keep finding news and articles about them almost everywhere.

So what makes AI and Blockchain so special to be in the spotlight lately, and what benefits would combining two such different technologies produce?

To answer the latter, we must first understand what Blockchain and AI are.

What is Blockchain? 

Although the first idea about blockchain technology was described in 1991, it took 2 decades until in 2008, the first real-world blockchain application, Bitcoin, was introduced on the internet.

Blockchain is a digital database of transactions. It serves as a digital ledger that stores information in blocks. This information is copied and distributed over a network of computers.

Before a new transaction is added to a blockchain, it is validated by multiple computers that ensure the authenticity of the transactions, in this way, the system is protected against someone adding invalid blocks and transactions. 

This means that if someone sends digital coins to a friend, he/she cannot hack into the system and add additional transactions that did not take place.

Today, our digital footprints and our actions are constantly being recorded and tracked. Blockchain gives us the necessary anonymity while providing transparency and increased security.

So, while the transactions are public and can be seen by everyone, the true identity of the participants is not revealed.

What is AI?

Artificial intelligence (AI) is another revolutionary technology that is changing the world. Its application has spread to almost every sector of the economy, boosting profitability and driving growth. 

Artificial intelligence is a computer system that performs tasks that traditionally require human intelligence.

Data is the key to making AI systems work. With the help of data, AI-powered systems can recognize patterns and make independent and intelligent decisions to obtain the best possible result.

With the right quantity and quality of data, AI offers the following benefits: 

  • Saving time and costs by automating routine attacks
  • Predicting the outcome based on historical data
  • Eliminating human error
  • Making faster and more accurate decisions

Exactly with the help of artificial intelligence, companies can forecast energy demand, identify diseases in the early stages, optimize operations and much more.

Benefits of merging AI and Blockchain 

Now that we understand what blockchain and artificial intelligence are, let’s move on to real-world applications and the benefits of merging the two.

Enhanced computing power

One thing that comes to everyone’s mind when we hear mining cryptocurrencies like Bitcoin, is a lot of processing power and electricity.

The process of “mining” means computers that solve complex mathematical problems in order to be rewarded with new cryptocurrencies. 

So to mine Bitcoins, for example, computers test all character combinations to guess the correct one and verify transactions.

The point is that the more miners join the network, the more difficult it will be for the computers to guess the combinations. Ultimately, this results in a need for more processing power and electricity for mining.

The way AI has the potential to improve the process is by handling mining in a smarter way. AI systems will be able to increase accuracy and efficiency every time they guess a correct combination, as they will have more experience, that is, the training data.

With such technology, we could save a huge amount of wasted energy and not only speed up the process, but also make it less expensive.

Explaining AI decisions 

The decisions and actions taken by AI algorithms are difficult for humans to understand due to the large amount of data that the system can process in a matter of seconds.

Because of this, the AI decision-making process is like a black box for researchers. Since we cannot understand what happens during the process and how AI systems “think”, it creates a roadblock and restricts researchers from fully understanding why AI makes certain decisions.

As we know, every transaction on the Blockchain is recorded and can be traced. So if all the variables and processes used during AI decision making are recorded on the blockchain, we will be able to understand the logic of the system and inspect the entire process, from start to finish.

Data security

We know that data is the lifeblood of AI. Quality data is decisive to achieve the desired results and accuracy with AI systems.

In most cases, the data we feed into artificial intelligence systems is very valuable. Depending on the industry, it may include the patient’s health history, user banking information, and other sensitive data. Therefore, ensuring data security is vital for companies.

Secure encryption and reliable data classification is what blockchain is exactly four famous for. Combining it with AI, companies can have access to a secure data storage and management system.

Blockchain data encryption with a unique digital signature (private key) makes the system tamper-proof and highly secure, ensuring that only the private key holders can access the sensitive data.

Conclusion

AI and Blockchain technologies are receiving increasing attention, but their combination remains unexplored. However, by merging AI and blockchain, they benefit each other with more efficiency and security.

Due to the immense potential that the fusion of these two technologies can generate, more and more companies are investigating it and planning to exploit it in the very near future.

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© 2021 - MaxinAI | All Rights Reserved