In a world of strict borders, decentralized finance provides digital nomads with the necessary tools for financial freedom.
Those who study history may remember the city-states of medieval Europe. Back then, caravans traveled from city-state to city-state, bringing luxury goods and news from distant lands. It was this way of life that allowed these merchants freedom of movement and choice. This is very similar to the concept described by Michael Ondaatje in his book "The English Patient". The author envisions complete freedom, with no national boundaries or nationalities to limit people's struggle for development and progress.
Today, broader access to financial markets through decentralized finance marks the beginning of an open world. DeFi has been very active in terms of wealth enhancement and cheaper financing, giving new meaning to the concept of "money for all". By using blockchain technology to eliminate intermediaries, DeFi expands the scope of financial transactions while significantly reducing costs. It is clear that DeFi is the future of finance and other industries. The only question that remains is: How fast can we get there?
DeFi ends in a year
It's fascinating that in just a decade, we've come from the concept of Bitcoin (BTC) as a digital currency (and personal bank in the traditional sense) to Wrapped BTC, agriculture and all the other cryptocurrency alchemy.
Essentially, there are several types of applications for DeFi, reflecting the depth of its integration and scope of use. Decentralized exchanges (DEX) represent a large class of DeFi operations that offer permissionless cryptocurrency trading. Stablecoins are pegged to external assets such as fiat currencies and precious metals. Lending platforms and prediction markets are also prevalent in the sector.
Related: What's Shaping the Future of Institutional Cryptocurrency Markets?
DeFi is known to support income farming and liquidity mining, providing a niche way to leverage cryptocurrency assets that are now mainstream.
Now, entire cities are embracing the new paradigm and are ready to welcome cryptocurrency-savvy citizens. Seoul, for example, set out a strategy in 2019 to become a global leader in blockchain technology. Then-mayor Park Won-soon introduced Seoul's blockchain city rollout plan, which will serve as the foundation for the fourth industrial revolution. Even before the presentation, some administrative services were already using blockchain technology in 2018. However, the new plan will expand the technology by issuing the Seoul Citizen Card S-Coin to include direct democracy, online verification, mileage management, and many others.
The proposed cryptocurrency city in Nevada represents a different kind of scenario. It is an experiment conducted by cryptocurrency millionaire Jeffrey Berns, who bought land in Nevada and decided to lay the groundwork for the creation of a fully blockchain-based city. The initiative was opposed by the local government and became one of the main obstacles in the way of building the new city. The decentralization factor scares politicians because they risk losing control. However, the recent congressional hearings on Web3 have brought hope of reaching a consensus on this topic.
Notably, Dubai launched the Dubai Blockchain Strategic Initiative as a key component of the United Arab Emirates Blockchain Strategy 2021, which aims to migrate at least 50% of government transactions to the blockchain. The government sees in its innovative approach an economic opportunity for positive transformation. Dubai is currently attracting blockchain evangelists and digital nomads from around the world.
Related: Cryptocurrency Oasis: How the UAE Became the Middle East's Digital Asset Champion
It is clear that the failure of governments to realize the potential of DeFi and blockchain could lead to economic lag in their respective countries. The launch of the Central Bank Digital Currency (CBDC) has become a major indication of the government's shift towards implementing blockchain-based technologies.
The Atlantic Council has developed a tool to track the stages of various CBDC projects in all countries. Note that Ukraine, China, Sweden, South Africa, Malaysia, Singapore, Thailand, South Korea, Saudi Arabia, the United Arab Emirates, and several other countries have already launched pilot versions of their CBDCs. Meanwhile, Nigeria, Bahamas, and Eastern Caribbean countries have launched their CBDCs as working projects.
Some see government not only as a ruling body, but as a proxy service provider. Global economic freedom, driven by DeFi, will allow the choice of governments that provide the best services in terms of quality, speed and efficiency. This particularly relates to the taxation of cryptocurrency assets.
Responsibility is freedom
In cryptocurrency, your key means you own your money. You are your own bank. Therefore, being responsible for your money does provide the freedom to use it as you wish, capitalize it as you choose, and interact with it on any platform or blockchain you want. Quote from Michael Ondaatje.
“We are a real country, not a border with a strong man’s name on the map.”
Nationality does not imply location, but belonging to a certain group. One day, entire groups may migrate to their own metaverse. As competition for qualified professionals under a Visa-free system may become more intense, entire cities and countries may come up with special strategies to attract digital nomads. But will they settle down and have that freedom?
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making decisions.
The views, ideas and opinions expressed herein are those of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Katia Shabanova is the founder of Forward PR Studio and has over 20 years of experience implementing projects for IT companies, from Fortune 1000 companies and venture funds to pre-IPO startups. She holds a BA in English Linguistics and German Studies from Santa Clara University in California and an MA in Linguistics from the University of Göttingen in Germany. She has published articles in Benzinga, Investing, iTWire, Hackernoon, Macwelt, Embedded Computing Design, CRN, CIO, Security Magazine, and others.