The DeFi and CeFi ecosystems can be truly symbiotic. Where one fails the other shines. DeFi brings security, scalability and often increased yields for investors they can’t get inside the traditional financial ecosystem. Centralized finance brings liquidity. Many CeFi investors are opening their eyes to the advantages of the blockchain and smart contracts and how they can enhance their own portfolio performance using this technology. As the CEO of RSK, a secure smart contract platform, Diego Gutiérrez Zaldívar views the future of finance as a decentralized one, with Bitcoin as the greatest DeFi opportunity of all.
Diego defines himself as a Bitcoin evangelist. As one of the founders of the Argentinean Bitcoin Community, he organized the first bitcoin conference in Latin America. He was also one of the early practitioners of web development in Argentina and Latin America back in 1995 and since 2012, has been fostering and promoting Bitcoin technology across Latin America.
Diego Gutiérrez Zaldívar
CeFi Vs DeFi
The great debate is whether decentralized or centralized exchanges are better. Centralized Exchanges act as gateways between national economies and the global crypto economies, which means of course that they are subject to the regulations of the countries they operate in. Their role is critical in facilitating the transfer of wealth from the legacy financial system into the new financial rail that decentralized Blockchain networks are building.
According to Zaldívar, on the other hand “Decentralized Exchanges (DEXes) allow users to swap assets within a certain crypto economy in a non custodial way where users are in full control of their own assets. DEXes provide a transparent price discovery process and benefit from a global pool of liquidity and some have achieved volumes on par with the top centralized Exchanges like Binance.” Both systems, then, are critical building blocks for the emergence of the new Internet of Value that started with Bitcoin and for the last decade has been expanding to create the foundations for the financial system of the future.
The Benefits of Smart Contracts
The broad definition of a Smart Contract is any computer program that executes the clauses of an agreement between multiple parties. This concept was coined in the early nineties but the true value of the concept emerged when it was combined with cryptocurrencies and in the context of self executing decentralized Blockchain networks that had the ability to enforce complex agreements to handle digital money and other digital assets. The first implementation with relevant adoption of the concept was the Ethereum Network. A couple of years later RSK followed, extending the Bitcoin Ecosystem to support smart contracts; other decentralized networks joined soon after.
According to Zaldívar “Smart contracts are not very different from traditional contracts, except that they are coded and digitally recorded on the blockchain. And this last quality gives smart contracts a host of significant advantages over traditional contracts — smart contracts provide users a trustless, autonomous, and self-sufficient way to settle agreements without intermediaries and enable decentralized Blockchain networks to offer all the financial services offered in the legacy financial system in an open, global and interpretable environment.”
The Difference Between Smart Contracts and Blockchains?
A blockchain is an immutable ledger in which decentralized networks record the last agreed status of the network. In simple terms is an immutable registry where the last state of the network is recorded. A smart contract is business logic executed by decentralized networks based on which balances and state of agreements are updated and recorded on the blockchain. Smart Contact enables the settlement of complex transactions that go beyond exchanging digital assets. In other words, it’s exactly what it sounds like: a contract, or an agreement…