The intersection of e-commerce and NFTs: how NFT technology is changing DeFi
DeFi and fintech startups are putting financial tools in the hands of the average person. NFT technology takes this a step further by offering trustless transparency and programmable data.
Markets evolved for good reason. It’s much easier for customers to visit a single location to find everything they need than to search across town. Most people rely on the convenience of places like Walmart or Target even though Mom-and-pop or boutique stores can be a refreshing change of pace.
Centralized markets are not new. Crowded bazaars existed long before the Internet. Marketers have always been better off following customers rather than expecting them to follow them, even if it means paying a small fee for the privilege of showing off their wares to the widest audience gathered by the marketplace.
Market coordinators need funds to pay for their accommodation and their time. Ancillary services are provided by many markets to help attract more customers, such as decorations, currency exchange, entertainment, etc. Unfortunately, the vastness of the Internet has caused these core markets to accumulate an imbalance of wealth and resources. This imbalance gives them the power to charge unreasonable rates for your accommodation. They also have the freedom to choose which sellers can participate in their marketplace, the flow of customer traffic, and how products are displayed.
DeFi (decentralized finance) technology enables the inherent convenience of centralized markets without allowing wealth and governance authority to accumulate in one person’s wallet. Essentially, DeFi is enabled by the blockchain, which allows permissionless peer-to-peer transactions. This cuts out middlemen like banks and other large financial institutions. It reduces costs and technical barriers for entrepreneurs and individuals. Fees, documentation, and legal jurisdictions prevent many people around the world from accessing the financial tools they need to be successful. DeFi platforms avoid the need for all of these things and allow you to transact in a secure environment.
NFTs are the driving force behind a significant part of the DeFi infrastructure. NFTs are not limited to collectibles. Programmable bits of data stored on the blockchain are NFTs. The development of blockchain provides a hack-proof and transparent storage solution. This is equivalent to ownership over pieces of data that can be programmed to do different things when interacted with. Let’s break that down and demonstrate how new DeFi platforms are safely and efficiently decentralizing e-commerce.
At the most basic level, an NFT can be owned by one person, and the only way to take it from that person is to pay for it. There is no way to duplicate or steal it. Even after its sale, it can be programmed to continue to give royalties to the original owner. NFTify provides entrepreneurs with a platform to create an online digital NFT store without writing a single line of code. It is also equipped with artificial intelligence that helps detect NFTs that might be similar to its own, adding to the protection of the already secure blockchain network. This puts a small business in the hands of an individual without the need to set up any infrastructure of their own.
NFT to represent real-world items instead of digital items. Now translate all that old potential into actual retail. Inventory data is stored on the blockchain, which prevents any market that lists the NFT from selling it twice. Affiliates can sell products with NFTs for profit and get paid immediately because of how the NFT is programmed. Smart contract is used to hold and transfer the funds. Buyers will know their purchase is authentic because the NFT cannot be duplicated or altered. Scalp problems and fakes would become a thing of the past.
An environment like this is trustless, which means that users are not required to trust each other to transact securely. The platform itself acts as an intermediary. Instead of the platform accumulating wealth like a central marketplace would, those profits are redistributed to users. The adaptations mentioned above are built into the platform and can be improved by those who invest in the system. Most platforms allow users to vote on bug fixes and updates.
There are different platforms connecting NFTs to real-world products. These platforms converts real-world items into financial assets. These NFTs can be traded, sold, bought, and borrowed. They can even be fractioned and pieces can be bought and sold. They can be staked for yield, meaning they can be locked onto the platform for small rewards over time. Creating liquidity in real-world items is the definition of digitizing reality. It’s similar to how Wall Street turned gold into derivatives. The difference is that normal people can now use similar tools with whatever valuables they may have on hand. Projects like this help level the playing field between rich and poor.
Pandora is a mix between eCommerce and DeFi. Sometimes NFT assets are not sold for long periods of time. Drops convert NFTs into liquid assets that can be used to borrow cryptocurrencies. This allows users to trade their assets the way wealthy people like to trade. Users can also stand on the other side of this transaction and put their coin in a pool so other users can borrow. This platform creates a bank-like environment where the development of NFTs are the collateral, as gold used to be. Only on this platform, users can access the same tools used by banks, but at an institutional level. The efficiency of the blockchain reduces costs to almost nothing,
DeFi and NFT are changing the way money circulates within our economy. NFTs are becoming financial instruments with which we can do business and make money. The collectible craze may be on the wane, but the development of NFT technology is only now beginning to really penetrate the market. The more widespread NFT projects become, the more users will have the tools they need to act independently and trade assets on their own terms.