5 Next Generation Finance Concepts
I am explaining 5 next generation finance concepts for kids and parents: What is DeFi? What is P2P? What is Staking? What is Stable Coin? What is Bitcoin?
Decentralized finance and financial technologies achieved rapid development after Bitcoin’s presence. They are in our lives both as permanent and transformative. For this reason, we have to learn and adapt some concepts and processes ourselves and explain them to our kids.
Bitcoin opened the doors of a new financial system with the publication of its white paper on October 31, 2008. Thousands of different cryptocurrency projects were developed following the Bitcoin. Bitcoin is the first and the king of cryptocurrencies with its decentralization, anonymity, limited supply and all other valuable features!
I am explaining 5 next generation finance concepts those come to mind in this post. More posts will be here with new terms soon.
Let’s start to review first 5!
What is DeFi?
It is a term derived from the concept of "Decentralized Finance". It is the decentralized and peer-to-peer version of traditional banking services such as interest, loans, borrowing/lending, insurance products, and asset swapping.
Anonymous transactions are made with crypto wallets.
It facilitates and democratizes access to financial services.
It is fast and low cost solution and service.
What is P2P?
It is formed from the initials of the term "Play to Earn" and means play game or use gamified applications to have finance related benefits.
As players play video, mobile and metaverse games and complete levels or targets, they earn crypto assets such as coins/tokens or NFTs.
Earned crypto assets can be used in-app/game or converted to fiat currencies on a different platform.
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What is Staking?
It means locking a cryptocurrency in a crypto wallet without using it for transfers or other transactions for a certain period of time. Staking cryptocurrencies provide the verification and security of all transactions without an intermediary such as a bank with a Proof of Stake (PoS) consensus mechanism.
It provides verification and security of all transactions without intermediaries.
With staking, your cryptocurrency is involved in the PoS process.
When you staking, you can win the determined rewards in return.
What is Stable Coin?
Stable coin is a cryptocurrency pegged to the price of fiat currencies such as USD, EUR, GBP. In addition to fiat currencies, there are also those that are pegged to the gram or ounce price of precious metals such as gold and silver.
Stable coins can be traded for fiat currency on cryptocurrency exchanges.
The price gap between the buy and sell prices applied by the central banks may not be occurred with stable coins.
What is Bitcoin?
Bitcoin is the first developed and launched cryptocurrency. Its developer is an anonymous person or people under the pseudonym Satoshi Nakamoto. It runs on a decentralized blockchain and transfers are peer-to-peer.
Its maximum supply is limited to 21 million BTCs.
Every 4 years, there is a block reward decreasing, called a halving.
The next Halving will take place in approximately May 2024.