Outside of the novelty and consistent price speculation of cryptocurrencies, one trend that has fast materialized is for an open and more accessible financial ecosystem.
With the expansion of regulation and infrastructure, facilitating open financial tools loom large, and while this innovation is for the greater good, many entrepreneurs are stuttering at the scale at which this sector is growing. From open source tools to standardized identity protocols like anti-money laundering, the digital asset market is slowly converging with different economic structures that will help entrepreneurs in the long run.
Open and integrated finance
Decentralized or open finance is a type of interoperable financial system that involves transparency, standardization, financial inclusion, and increased accessibility. This opens the opportunity for financial tools to play a more crucial part. For example, crypto traders are using trading tools and indicators to check the market condition before investing. Tools like BTC Profit System offer the most accurate information of the currencies and their expected behavior by using a combination of algorithms.
This approach has also helped many cryptocurrencies to lower their barrier so that investors can access transfer mechanisms and value storage. The currencies are trying to create a separate class of assets and remove intermediaries that exist outside the existing financial system.
One of the most significant aspects of this movement is the emphasis on different financial tools built on blockchain protocols for digital assets. Since these projects are expanding on the basis of blockchain technology, they are useful to build open financial instruments that offer more transparency to entrepreneurs; something that they had been looking for all this while.
Open financial tools
The introduction of open financial tools is providing secured lending services. This sector has a massive potential to benefit new entrepreneurs as it constitutes the biggest part of the open finance structure. However, other financial systems that are also gaining ground are decentralized prediction markets and security tokens, especially after utility tokens saw a downfall in the last couple of years.
Although the potential of various open protocols is still there, experts believe that the market is highly unlikely to experience a wholesale transition when it comes to financial instruments operating on the blockchain.
What is more likely to happen is the introduction of a hybrid ecosystem involving digital assets and open protocols with integrated businesses and traditional financial systems. It is still early days to consider a paradigm shift from traditional to digital in the next few years. So, a convergence is what everyone expects to happen.
If an open financial system has to exist, it will require a lot of innovation and proper infrastructure in different sectors. Financial and regulatory institutions in the United States are approaching a more mature market before jumping into the concept of digital assets. More startups are shifting their attention from ICOs to regulatory-compliant digital assets and transparent security tokens. Even ICO models are now focusing on anti-money laundering and KYC processes to reduce this transition and regain the market they have lost. So, entrepreneurs can be assured that the open financial tools and services will work in their favor instead of going against them.
