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Why holding bitcoin is better than having a fixed deposit?
Syed Shoeb

One day, digital tokens may potentially lead to the creation of a new financial system that is completely decentralized, more transparent and efficient. Rather than waiting for them to get mainstream acceptance, the financial services should start adopting digital tokens now and benefit from them. They should note that people are already using tokens to invest in artworks and gain ownership of buildings and other facilities.

There are chances that the financial services may get left behind if they ignore digital tokens today.

What are Digital Tokens?

Digital tokens are not cryptocurrencies. They are created on top of an already existing blockchain and have their own features and functionalities. The most popular digital tokens are ERC-20 tokens, built on the Ethereum platform.

Different types of digital tokens are available on the blockchains. Some can be used as virtual currency, while others may represent physical assets in the real world. Some have utility functions and are called utility tokens, and other tokens represent security and are known as security tokens.

How Financial Services Will Benefit from Adopting Digital Tokens?

Financial services must change with time and explore the decentralization values of Blockchain technology. With this, they can enhance their services and become more efficient by embracing digital tokens. Also, leveraging them, the financial services can cater to audiences from across borders without any bounds.

Here is how financial services can benefit by leveraging digital tokens.

Faster and Cheaper Transactions

The traditional financial systems charge high transactional fees but provide slow services. With digital tokens, they can change that. They can offer faster and cheaper transactions, even when it is cross-border transactions. It is because the transaction of the funds can be done using tokens and verified with smart contracts, which reduce or eliminate the need for intermediaries.

Improve Transparency

The common complaint against the traditional financial services is that they are not transparent enough. By adopting blockchain tech, tables can be turned. The participants know who they are dealing with, and each one of them is aware of how their funds are being utilized. The sender and the receiver can check each other’s details, and also find out, who previously owned the tokens. Also, no one can change the ownership information. It is immutable.

Nuo’s non-custodial Decentralized Finance protocol allows users to have all access to how much funds are being loaned out and the value of interest rates generated on a daily basis.

Greater Accessibility

Digital tokens allow a lot of people to own various assets at every point of time. Due to the inflated interest rates all over the world, different parts of the world charge different interest rates on the funds or assets that the user wants to borrow.

But, on a DeFi platform like Nuo, users from across the globe can buy and hold or lend the assets that they feel like owning by collateralizing their debt in terms of less preferred tokens.

Check out Nuo’s Borrow Platform!

Greater Liquidity

By tokenizing assets, the investors can trade them in the secondary markets for significant leverage without actually selling them. Hence providing higher liquidity. For example, an ERC 20 token DAI in USDC market can be leveraged 3x times the value that the user holds and can be traded without putting the real one in the market for selling.

 

Disclaimer: This is not financial advice. Opinions, statements, estimates, and projections in this message or other media are solely those of the individual author(s).

 

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