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In physics, Newton’s Laws of Motion dictate the outcome of
two moving objects colliding. Different factors such as mass and speed make
calculating the impact of, say, a linebacker tackling a wide receiver in the
open field relatively predictable.
In society, however, when two competing ideologies clash,
the results are less predictable. Factors like resources and social capital can
help experts make historically rooted predictions, providing analyses for what
to expect during unstable times, but in a far less scientific manner.
While economics is a social science, only one financial
model has dominated the global economy for centuries, remaining largely
unchallenged, until recently.
The creation of Bitcoin , the world’s original
cryptocurrency, marked a pivotal moment in modern economics: the first time an
alternative financial system was actually capable of challenging the
centralised banking industry status quo.
Of course, this didn’t happen
immediately. It took over a decade of events and technological developments for
the decentralised model that spun out of Bitcoin’s launch to gain its place.
But political, religious, or social conflicts tend to result
in one side asserting dominance over the other, with little or no room for
compromise.
While traditional finance (TradFi) and crypto are
diametrically opposed in theory, the former has grown increasingly drawn to the
latter’s maturation, expansion, and technological achievements.
Decentralised finance (DeFi),
for instance, represents one area that is particularly appealing to
institutions as it includes tokenised real-world assets and other
blockchain-based applications with high-potential revenue opportunities.
Likewise, the crypto industry,
originally established to reject TradFi’s centralised system, has increasingly
opened up to the idea that institutional participation is beneficial for
expansion.
Blockgyan Academy Day 191
How does DeFi differ from TradFi?#BTC #ETH #DeFi #TradeFi https://t.co/VWFiT980a3 pic.twitter.com/5vwgI18WTv
— BlockGyan (@BlockGyan247) December 20, 2024
In addition to these examples, the competing financial
models are moving together while remaining rivals in other ways; similar to the
relationship between China and the US, where economic competition coexists
alongside cooperation on trade and scientific research.
Competing Models Move Closer Together
Just like we
don’t know what the future holds for China-U.S. relations, the same can be
said for the relationship between crypto and TradFi. However, pundits and
insiders believe that the future of finance will inevitably merge both
financial models.
There’s good reason to believe this is likely, since
crypto’s market capitalisation is racing toward $4 trillion, while TradFi, which still
serves as the gateway to the rest of the globe’s wealth, pursues its
decentralised rival.
Yet, despite growing interest in digital assets and DeFi
by retail and institutional investors, traditional financial systems will
remain the backbone of global finance.
As DeFi and blockchain-based assets take on a larger role in
the economy, TradFi’s desire to engage with its decentralised counterpart will
keep rising. Despite this, tangible institutional crypto involvement lags
behind its desire to participate.
Compliant Blockchain Enables DeFi Integration
Understanding the mutually beneficial relationship of
TradFi-DeFi integration, Vixichain is an example of a company working to expand
traditional institutions’ limited role in blockchain ecosystems.
Vixichain
realises that financial institutions are accustomed to complying with
well-defined regulatory frameworks that include consumer privacy protections.
With this in mind, it built a compliant and private blockchain designed for
banks, providing them with a safe space to interact with DeFi.
DeFi meets Real World Assets
DeFi aims to replace every aspect of the traditional banking sector. Loans and Mortgages are no exception, no need to wait for weeks until banks verify the processes. Using #DeFi, you’d be able to take out a loan or mortgage in seconds.#DeFi… pic.twitter.com/u9ci3Sm0PI
— JA (@ja1405_ja) April 3, 2024
Vixichain’s Layer-1 blockchain helps
TradFi institutions overcome their reluctance to engage with unregulated public
blockchains and gain exposure to expansive investing opportunities through DeFi
protocols, in a compliant manner.
It accomplishes this by onboarding financial
institutions to serve as network validators, where they receive fees for
validating end-user transactions on Vixichain’s blockchain.
Vixichain Bridges DeFi and TradFi Models
End-users connect to Vixichain’s crypto wallet, which allows
them to store, send, and accept crypto, and then select their preferred
institution to validate the transaction based on pre-set rates.
Vixichain
grants safe access to the world of DeFi through a non-fungible stable token
(NUSD) backed by securely stored fiat. By using NFT technology to create a
stablecoin, NUSD acts as a completely traceable bridge to DeFi, while
maintaining institutional-level privacy and compliance.
While these two models were once on a collision course, they
now seem destined for co-existence. As finance evolves, its future remains
unclear, but bridging the gaps between the two rival models with innovative
solutions will enable an efficient hybrid model to naturally take shape.
In physics, Newton’s Laws of Motion dictate the outcome of
two moving objects colliding. Different factors such as mass and speed make
calculating the impact of, say, a linebacker tackling a wide receiver in the
open field relatively predictable.
In society, however, when two competing ideologies clash,
the results are less predictable. Factors like resources and social capital can
help experts make historically rooted predictions, providing analyses for what
to expect during unstable times, but in a far less scientific manner.
While economics is a social science, only one financial
model has dominated the global economy for centuries, remaining largely
unchallenged, until recently.
The creation of Bitcoin , the world’s original
cryptocurrency, marked a pivotal moment in modern economics: the first time an
alternative financial system was actually capable of challenging the
centralised banking industry status quo.
Of course, this didn’t happen
immediately. It took over a decade of events and technological developments for
the decentralised model that spun out of Bitcoin’s launch to gain its place.
But political, religious, or social conflicts tend to result
in one side asserting dominance over the other, with little or no room for
compromise.
While traditional finance (TradFi) and crypto are
diametrically opposed in theory, the former has grown increasingly drawn to the
latter’s maturation, expansion, and technological achievements.
Decentralised finance (DeFi),
for instance, represents one area that is particularly appealing to
institutions as it includes tokenised real-world assets and other
blockchain-based applications with high-potential revenue opportunities.
Likewise, the crypto industry,
originally established to reject TradFi’s centralised system, has increasingly
opened up to the idea that institutional participation is beneficial for
expansion.
Blockgyan Academy Day 191
How does DeFi differ from TradFi?#BTC #ETH #DeFi #TradeFi https://t.co/VWFiT980a3 pic.twitter.com/5vwgI18WTv
— BlockGyan (@BlockGyan247) December 20, 2024
In addition to these examples, the competing financial
models are moving together while remaining rivals in other ways; similar to the
relationship between China and the US, where economic competition coexists
alongside cooperation on trade and scientific research.
Competing Models Move Closer Together
Just like we
don’t know what the future holds for China-U.S. relations, the same can be
said for the relationship between crypto and TradFi. However, pundits and
insiders believe that the future of finance will inevitably merge both
financial models.
There’s good reason to believe this is likely, since
crypto’s market capitalisation is racing toward $4 trillion, while TradFi, which still
serves as the gateway to the rest of the globe’s wealth, pursues its
decentralised rival.
Yet, despite growing interest in digital assets and DeFi
by retail and institutional investors, traditional financial systems will
remain the backbone of global finance.
As DeFi and blockchain-based assets take on a larger role in
the economy, TradFi’s desire to engage with its decentralised counterpart will
keep rising. Despite this, tangible institutional crypto involvement lags
behind its desire to participate.
Compliant Blockchain Enables DeFi Integration
Understanding the mutually beneficial relationship of
TradFi-DeFi integration, Vixichain is an example of a company working to expand
traditional institutions’ limited role in blockchain ecosystems.
Vixichain
realises that financial institutions are accustomed to complying with
well-defined regulatory frameworks that include consumer privacy protections.
With this in mind, it built a compliant and private blockchain designed for
banks, providing them with a safe space to interact with DeFi.
DeFi meets Real World Assets
DeFi aims to replace every aspect of the traditional banking sector. Loans and Mortgages are no exception, no need to wait for weeks until banks verify the processes. Using #DeFi, you’d be able to take out a loan or mortgage in seconds.#DeFi… pic.twitter.com/u9ci3Sm0PI
— JA (@ja1405_ja) April 3, 2024
Vixichain’s Layer-1 blockchain helps
TradFi institutions overcome their reluctance to engage with unregulated public
blockchains and gain exposure to expansive investing opportunities through DeFi
protocols, in a compliant manner.
It accomplishes this by onboarding financial
institutions to serve as network validators, where they receive fees for
validating end-user transactions on Vixichain’s blockchain.
Vixichain Bridges DeFi and TradFi Models
End-users connect to Vixichain’s crypto wallet, which allows
them to store, send, and accept crypto, and then select their preferred
institution to validate the transaction based on pre-set rates.
Vixichain
grants safe access to the world of DeFi through a non-fungible stable token
(NUSD) backed by securely stored fiat. By using NFT technology to create a
stablecoin, NUSD acts as a completely traceable bridge to DeFi, while
maintaining institutional-level privacy and compliance.
While these two models were once on a collision course, they
now seem destined for co-existence. As finance evolves, its future remains
unclear, but bridging the gaps between the two rival models with innovative
solutions will enable an efficient hybrid model to naturally take shape.
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