DeFi and Fintech startups put financial instruments into the hands of the average citizen. NFT technology goes one step further by providing programmable data and trustworthy transparency.
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Markets evolved into what they are today for good reason. It is much easier for customers to visit a single place to find everything they need than it is to search the city. Corner shops or boutiques can be a refreshing change of pace, but most people rely on the convenience of places like Walmart or Target. It's just more efficient.
Centralized markets are not new. Overcrowded bazaars existed long before the internet. Sellers have always been better off following customers than expecting customers to follow them, even if it means paying a small fee for the privilege of showing their goods to a wider market audience.
Market coordinators need funds to pay for your accommodations and their time. Many markets offer ancillary services to attract more customers such as decorations, currency exchange, entertainment, etc. Unfortunately, the vastness of the Internet has caused these central marketplaces to amass an imbalance of wealth and resources. This imbalance gives them the power to charge unreasonable prices for their accommodations. You can also freely choose which sellers are allowed to participate in their market, how customer traffic flows and how products are displayed.
Related: How Blockchain and Cryptocurrency Can Revolutionize Businesses
DeFi (decentralized finance) technology enables the inherent convenience of centralized markets without allowing wealth and government authority to flow into a person's wallet. Essentially, DeFi is made possible by the blockchain, which enables permissionless peer-to-peer transactions. This eliminates the need for intermediaries such as banks and other large financial institutions. It lowers costs and technical hurdles for entrepreneurs and private individuals. Fees, documentation, and jurisdictions prevent many people around the world from accessing the financial instruments they need to be successful. DeFi platforms bypass the need for all of these things and allow them to transact in a secure environment.
NFTs are the driving force behind a significant part of the DeFi infrastructure. NFTs aren't limited to collectibles. They represent programmable data bits that are stored in the blockchain. The blockchain offers a transparent, hack-proof storage solution. This corresponds to ownership of data elements, which can be programmed to do different things when interacting with them. Let's break that down and show how new DeFi platforms are securely and efficiently decentralizing e-commerce.
Basically, an NFT can belong to one person, and the only way to take it away from that person is to pay for it. There is no way to duplicate or steal it. Even after the sale, it can be programmed to continue paying royalties to the original owner. It's easy to see how to quickly translate these concepts into e-commerce potential. NFTify offers entrepreneurs a platform to create a digital NFT online store without writing a single line of code. It's also loaded with AI to help you spot NFTs that might be similar to yours and add protection to the already secure blockchain network. This puts a small business in the hands of a single person without having to build their own infrastructure.
Another project takes this concept to the next level by allowing users to create an e-commerce store from real-world items. Splyt uses NFTs to represent objects from the real world instead of digital objects. Now translate all of that earlier potential into actual retail. The inventory data is stored on the blockchain, which prevents a market listing the NFT from selling it twice. Business owners can sell NFTs and collect royalties every time this item is resold. Affiliates can profitably sell products with NFTs and get paid immediately due to the programming of the NFT. It uses what is called a smart contract to hold and transfer the funds. Buyers know their purchase is authentic as the NFT cannot be duplicated or tampered with. Problems with scalping and counterfeiting would be a thing of the past.
Related: How Decentralized Can The Internet Get?
An environment like this is trustworthy, which means that users don't have to trust each other to conduct secure transactions. The platform itself acts as a middleman. Instead of the platform amassing wealth like a central market, those profits are redistributed to the users. The aforementioned customizations are built into the platform and can be improved by those who invest in the system. Most platforms allow users to vote on fixes and upgrades.
Splyt isn't the only platform connecting NFTs to real world products. Pandora turns real objects into financial assets. These NFTs can be bought, traded, sold, and loaned. They can even be fractionated and the pieces can be bought and sold. They can be used to generate income, which means they can be locked on the platform for small rewards over time. The creation of liquidity in real objects is the definition of the digitization of reality. It's similar to how Wall Street turned gold into derivatives. The difference is that ordinary people can now use similar tools with any valuables they might have on hand. Projects like this help to level the playing field between rich and poor.
Pandora is a mix of e-commerce and DeFi. Drops goes full DeFi. Sometimes NFT assets remain unsold for long periods of time. Drops turns NFTs into liquid assets that can be used to borrow cryptocurrencies. This allows users to trade their assets in the same way that wealthy people do. Users can also stand on the other side of this transaction and put their currency in a pool from which the other users can borrow. This platform creates a banking-like environment where NFTs are the security, much like gold used to be. Only on this platform can users access the same tools that banks use, but at the institutional level. The efficiency of the blockchain cuts costs to almost zero and ensures users get as much return on investment as possible.
DeFi and NFTs are changing the way money circulates in our economy. NFTs are becoming financial instruments that we can do business and make money with. The collector craze may be subsiding, but NFT technology is only now beginning to really penetrate the market. The more NFT projects go mainstream, the more users will get the tools they need to trade independently and trade assets on their own terms.