Those who have studied history well may remember the city-states of medieval Europe. Back then, caravans of merchants traveled from one city-state to another, bringing luxuries and news from distant places. It is this way of life that allowed these traders to have freedom of mobility and choice. It is a concept very similar to that described by Michael Ondaatje in his book The English Patient. The author envisioned total freedom, with no borders or nationalities limiting people in their quest for development and progress.
Today, wider access to financial markets through decentralized finance marks the beginning of the open world. DeFi has been very positive from the perspective of wealth accumulation and cheaper funding, giving new meaning to the concept of “finance for all”. By removing intermediaries through the use of blockchain technology, DeFi expands the reach of financial transactions while dramatically reducing their costs. It is obvious that DeFi is the future of finance and other industries. The only question that remains is: How fast will we get there?
DeFi wrapped up in a year
It’s quite fascinating how in just ten years we went from the concept of Bitcoin (BTC) as a digital currency (and personal bank in the traditional sense) to Wrapped BTC, agriculture and to all other crypto-alchemy.
Essentially, there are several types of applications for DeFi, reflecting the depth of its integration and the range of its uses. Decentralized exchanges (DEXs) represent a large category of DeFi operations, offering authorityless cryptocurrency trading. Stable coins are pegged to external assets, such as fiat currencies and precious metals. Lending platforms and prediction markets are also prevalent in the industry.
Related: What is shaping the future of the institutional crypto market?
Famously, DeFi enables yield farming and liquidity mining, providing a niche way to capitalize on crypto assets that have now become mainstream.
Entire cities are now embracing the new paradigm and preparing to welcome crypto-savvy citizens. Seoul, for example, developed a strategy to become a global leader in blockchain technology in 2019. Its then-mayor, Park Won-soon, presented the plan to promote Blockchain City Seoul, which would become the base of the fourth industrial revolution. Even before the presentation, several administrative departments were already using blockchain technology in 2018. However, the new plan would expand the scope of the technology to include direct democracy, online verification, mileage management through the issuance of S- Coin, the Seoul Citizen card. , and many more.
The proposed crypto city in Nevada represents another case. This is an experiment led by Jeffrey Berns, the cryptocurrency millionaire who bought a piece of land in the state of Nevada and decided to lay the groundwork to build a city entirely based on blockchain. The initiative was met with opposition from the local government, which became one of the main obstacles in the way of the creation of the new city. The element of decentralization frightened politicians because of the risk of them losing control. However, the recent Congress audience on Web3 brings hope to reach common ground on this topic.
Notably, Dubai launched its Dubai Blockchain Strategy initiative, becoming an important part of the UAE Blockchain Strategy 2021, which aims to migrate at least 50% of government transactions to blockchain. The government saw an economic opportunity for positive transformation in its innovative approaches. Currently, Dubai attracts blockchain evangelists and digital nomads from all over the world.
Related: The Crypto Oasis: How the UAE Became the Digital Asset Champion in the Middle East
It has become apparent that the failure of governments to realize the potential of DeFi and blockchain could risk causing economic backwardness in their respective countries. The launch of central bank digital currency (CBDC) has become the main sign suggesting a move by governments towards implementing blockchain-based technology.
The Atlantic Council has developed a tool monitoring all countries according to the different stages of their CBDC projects. Note that Ukraine, China, Sweden, South Africa, Malaysia, Singapore, Thailand, South Korea, Saudi Arabia, United Arab Emirates and several others have already launched the pilot versions of their CBDCs. At the same time, Nigeria, the Bahamas and Eastern Caribbean countries have launched their CBDCs as working projects.
Some see governments not only as governing institutions, but also as active service providers. Global economic freedom, fueled by DeFi, would select governments offering the best services in terms of quality, speed and efficiency. This concerns in particular the taxation of crypto-assets.
Responsibility is freedom
In crypto, your keys mean you own your money. You are your own bank. Thus, being responsible for your money indeed offers the freedom to spend it as you wish, to capitalize it as you wish and to interact on the platform or blockchain of your choice. To quote Michael Ondaatje:
“We are the real countries, not the borders drawn on maps with the names of powerful men.”
Nationality does not mean a place, but a membership in a certain group. One day, an entire group might migrate to their own metaverse. Since the competition for qualified professionals could become fiercer under a visa-free regime, cities and entire countries could come up with particular strategies to attract digital nomads. But would they ever settle down, having this freedom?
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 herein are those of the author alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Katia Shabanova is the founder of Forward PR Studio, bringing over 20 years of experience implementing programs for IT companies ranging from Fortune 1000 companies and venture capital funds to pre-IPO startups. She holds a BA in English Philology and German Studies from Santa Clara University in California and earned an MA in Philology from the University of Göttingen in Germany. She has been published in Benzinga, Investing, iTWire, Hackernoon, Macwelt, Embedded Computing Design, CRN, CIO, Security Magazine and others.