Thursday, October 29, 2020
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DeFi Marketplaces & Payments

Decentralized Marketplaces

Marketplaces and cryptocurrencies have a bad name because of the history. Silkroad was a marketplace which sold illegal substances and services, which has now evolved into other marketplaces still being used today. Although these days, marketplaces like these only count for a very minor percentage of cryptocurrency transactions overall.

In essence, a decentralized marketplace is a trustless network that doesn’t rely on middlemen, but upon smart contracts to carry out transactions.

Although still in the early days, some major trends are starting to emerge in this space regarding tokenizing assets such as real estate, the creation and exchange of NFTs which are collectibles (e.g. art) or gaming (virtual items).

p2p payments

DeFi Payments

One of the most obvious and utilized aspects of DeFi is peer to peer payments. In centralized situations that include fiat, payments usually have multiple intermediaries with each middleman ‘getting a cut’.

When it is a crypto-based centralized payment, usually the only intermediary is the exchange. The fee can be small but there is another party which knows who is sending, and to what address. To send a centralized payment, you would have usually done a KYC (Know Your Customer) so the exchange can identify you.

The other factor which we must take into account is that we rely upon the exchange to actually work and maintain the security of your funds because while it is on the exchange, you do not have access to the private keys.

DeFi Payment

Once you submit the payment, you must wait until they accept the transfer, which then initiates the payment to the supplied address. This process is usually quite quick now but, in the past, it would sometimes take 24-48 hours to actually go through.

 The DeFi aspect of sending payments is simple and easy. Peer to peer, your wallet to theirs, imput their wallet and send the amount that you need to send. The only fee is to power the transaction.

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