A More Personalised Future With Digital Identification 🔏
Decentralized Finance; an umbrella of centralized finance, and a glimpse of what is to unfold over the coming years within the financial sector. Gone are the days in which trades were highly bureaucratic actions dealt only by the financial elite. Today, thanks to a myriad of online trading platforms, one can trade at a lower cost across borders, and not just in ancient fiat currency either…
Cryptocurrencies have supercharged the evolution of the financial sector, demonstrating the need for an upgrade in security, operability and user experience. Developed on blockchain technology, DeFi is set to unravel the traditional centralized system, in substitution for a more transparent, and arguably threatening, model; hence the yearning from enthusiasts for a stronger personal identification protocol.
Most of us can conceive that digital identities will be the catapult towards a secure future in DeFi, but how? Well notably, the large ecosystem that is finance is riddled with risks to the everyday users and traders, hence the importance of digital identity for the successful deployment of DeFi, for both fraudulent and authenticity purposes.
Secondly, and as many of our readers will attest, digital identities are yet to appear as the priority in financial circles. Despite many companies adopting the challenge head-on, verification of identity is yet to be at the forefront of the successful approval, and operability, of DeFi by providers.
And finally, there’s the subject of credibility, or rather, the creditworthiness of said DeFi users. Otherwise known as Know Your Customer (KYC) compliance in finance, this criterion should be the determining factor as to whether or not a loan, or assets of any nature, should be borrowed. Clear identification of users therefore must be seen through, to deflect risky, overcollateralized loans. Needless to say, this cannot be achieved without the necessary digital identification prowess still absent in DeFi, to legitimise users for financial services.
As such, Digital Identities could be the critical pivoting arm of the entire future of the financial sector; not least thanks to the fundamentals of financial exchange and fraudulency prevention. DeFi is a large space, which, befalls the responsibility of the few, on the accounts and identities of the many. User privacy, wealth equality, and user security must first be explored before we see any major migrations to what is unquestionable, a promising future for DeFi.
The Cudos Network is a layer 1 blockchain and layer 2 computation and oracle network being designed to ensure decentralized, permissionless access to high-performance computing at scale and enable scaling of computing resources to 100,000’s of nodes. Once bridged onto Ethereum, Algorand, Polkadot, and Cosmos, Cudos will enable scalable compute and Layer 2 Oracles on all of the bridged blockchains.