Gullible & Pirates of DeFi Blockchains

Caution: - None of these opinions, facts and research materials are financial advice!

Gullible of Blockchains are termed both institutional or retail investors in blockchain technologies, invested on coins, securities, crypto currencies, and other virtual digital assets, it is all about investing in faith, and hope to accumulate wealth. Whereas, Pirates of DeFi (Distributed & Decentralized Finance) are fraud, cheaters, cybercriminals, experienced & determined active predators to prey on gullible, roaming around crypto gullies & gulches.

In fact, human civilization cannot be forced to be limited at current technologies, innovations, and constrained within circumstances, while civilization sails through digital seas, at early phase of innovation, pirates are unbeaten dirty winners, flourishing and enjoying pray (gullible) at the fast pace in innovation arena, pirates are very comfortable and confident cyber criminals. The white fiction is existed, as innovation being progressed without proper frameworks, rules, regulations, law enforcement & digital ethics in place. Sadly, investors or early adopters are beaten, eaten and reincarnated, as an ongoing technological phenomenon advancing.

Since the inception of blockchain technology, it is a horrific situation at the heart of distributed DeFi systems, in a snap of finger, blink of eyes, wallets been butchered, assets gone, years of savings dusted. Pirates have no mercy at all, gullible are culled within DeFi platforms, nowhere to report, humiliated to express being victim, just getting a corner, cry and self-sympathized, repeat and rinse to satisfy an utmost unpleasant experience in crypto world, grass the grey experience.

Every milestone of human civilization loved the outcomes of innovations and 21st century advancing into neuron of computer networks, so do blockchain becoming a powerhouse of technological shifts in the horizon. However, the current situation within distributed & decentralized systems must be more socialized, legalized, framed, compliance, secured and embraced at finest. It is everybody’s responsibilities to be secured, compliant, transparent and maintain privacy while adopting innovation and technologies, not only limited to innovators, investors but also inclusiveness of ICTF, SEC, IMF, Exchanges, Cybersecurity entities, FinTech, and other global governments is a must. ?

In author’s view, DLT (Distributed Ledger Technology) aka blockchain need a special attention to overcome the gullible & pirate of blockchain situation, while adopting in two major streamlines.

a.)???DeFi (Distributed Finance): - Current centralized financial system is too big to fail or migrate to DeFi instantly. It is excelled throughout many decades or centuries to accomplished into a modern FinTech global economy. Sufficient time is needed to fully migrate into DeFi. Many global economies, and all aspects of lives and associated supporting computing networks and systems are depended upon centralized financial institutions, centralized authorities, businesses & banking systems, monetary organization, and not limited to global government treasury spun across various jurisdictions.

The existing FinTech ecosystem is a vital for daily life, somewhere disruption in the financial chain can cause turbulences. Although every revolutionary changes in human society achieved by sacrifices. It does not mean existing system must dismantle or die at once, and embrace blockchain technology at once, where DLT technology is rapidly evolving and shaking existing systems & workforce, and adaptors are panic and confused. It must be understood thoroughly and speed up innovation in parallel.

For an instance, adoption of peer-to-peer payment system within blockchain are transparent, secure, fast, efficient, and virtually no cost at all. Stellar foundation is viable DeFi protocol XLM that can serve fast, least expensive, and efficient money transfer protocol, that enables access to financial banking to those who still do not have bank accounts.

Ripple is a global consortium, developed distributed confederate blockchain systems, XRP protocol designed to transaction money within global banks, it is also known to be fast, least expensive, and used for easy money transfer, business settlements and other financial B2B settlements protocol for smart contracts.

Integration of public blockchain or opensource XLM protocol with existing financial systems at edge of the financial system, where end-user or edge consumer domain is waiting for this kind of technology, also integration of XRP at distribution layer of global banking systems to replace, integrate with blockchain or phase out SWIFT system is undeniable.

Trading public blockchain technologies or DLT (Distributed Ledger Technology) protocols from platforms like ETF, EDX markets can be a transition bridge for institutional investors from traditional finance to DeFi. For an instance, Bitcoin, Ethereum, Bitcoin Cash, physical commodities in a form of security tokens can be offered for financial market without wallet custodial services, once shares of any entity or company transformed into digital tokens and offered from ETF/EDX platforms, at some extent transformation is achieved for legacy financial trading platforms.

Migrating to blockchain networks would be a game changer for S&P, NASDAQ like existing trading hubs, those platforms could become future hybrid DEX/CEX for security or commodity tokens trading platforms, an ultimate transformation into distributed finance is not far. Whereas, existing banks could integrate with crypto platforms like BINANCE, Crypto.com, Coinbase and serve as DEX/CEX or custodian authorities backed by the global governments, federal or reserve banks, and respective jurisdictions.

Perhaps SEC, CFTC, IMF like government entities should focus & control more on DeFi arena, and help streamline self-regulatory general policies for Daps innovation without interruption, confusion & total control.

b.)???Daps (Distributed Applications): - Current crypto landscape is embraced as a distribution and decentralized nodes and networks under common consensus, it is being adopted in a massive scale within platforms fueled by distributed ledger technology, inclusive of blockchain accessories, such as lunch pads, crypto centralized exchanges (CEX), crypto distributed exchanges (DEX) protocols, DAOs & IDO/ICO projects, where distributed systems and decentralized application services real use cases must be considered incentivization in use of gas/fuel (crypto tokens), but not to treat as monetization or monetary value to be taxed within DeFi applications. At pre stage innovation needs sufficient financial investment, not financial crunch at all for success.

Daps or web 3.0 is simply an upgrade of existing web 2.0 system along with additional internet bandwidth, networks connectivity & interoperability of ISPs, storage capacity, extra hardware resources, DLT database scalability, data & user privacy & wallets security, integration of cybersecurity frameworks, & legal policies to protect Daps, investors & innovators, certainly it would succeed as an ultimate integrating of web 2.0 with web 3.0.

For an instance, existing web 2.0 applications are mostly centralized and operated by consuming computer process, memory, hardware, centralized databases and storage, and connectivity networks, cost of operation is paid in fiat. Whereas, web 3.0 application consumes resources as web 2.0, however networks and resources are decentralized or distributed across various global nodes & validators with common consensus protocol to perform in consensus mechanism.

In web 3.0 cost of operation is paid from digital wallets in tokens or crypto currency designed for the specific or private blockchain instead executing fiat paid process or services. So, mandatory requirement of KYC for each wallet applied for Daps is like monitoring each application process in a monetary value, which is expensive & not feasible in upcoming IoT transformation future. However regulatory compliance is a must, regulatory consultation, DAO or blockchain products, or services registration, and permit are necessary to drive the innovation.

For an instance, Microsoft operating system, and other associated applications required for a general laptop or desktop, where a user pays fee for service in fiat. In blockchain Daps, a general user pays a fee for service by utilizing digital wallets in specific digital or crypto currency designed as a gas fee. In Daps world, validators, nodes operators, stakes holders are known to be the owner, miners or shareholders of the product or protocol. ?

Within blockchain ecosystem, digital wallets are replacing credit cards, crypto currency or digital tokens are traded via automated DEX or custodial CEX replacing fiat or traditional banks, the crypto tokens are used as fuel/gas for smart contract interaction, NFTs & tokens are keys to access the Daps services.

It is imperative to understand that, a private crypto currency or alt coins, that represents a private blockchain protocol within a specific blockchain ecosystem, must be a self-regulated exchangeable token or NFTs, and trading of such alt coins (that represent gas value) via CEX, DEX or commercial banks should be allowed to facilitate smoothly. Simply DEX or CEX are distributed fuel stations on internet networks highway for blockchain based Daps.

It is an absolute logic, that digital assets, such as crypto currency, or digital tokens, or NFTs exchanged for use within blockchain ecosystem, or trading of digital assets for profit via CEX or DEX are to be taxed. However, internal self-regulatory blockchain specific framework that facilitates staking and farming of tokens within the same ecosystems for validation purpose, DAOs, voting rights, and holding for future benefits should not be liable for tax. Relief in taxing such activities within blockchain empowers Daps, private networks, and preserves progressive culture for successful innovative adoption.

Although, any blockchain based products offered for fee or free must be self-regulated by smart contract (a code of law), offer scalability & security from owner/node of the specific blockchain, and authorization from consensus protocols within service providers/validators, together it is an integral part of the smart contract.

Crypto exchanges offering DAO lunch pads & Daps services must guarantee liquidity preservation to protect investors, third party security audit framework, KYC verification and validation, and respective LLD (Limited Liability DAOs) must be registered under an entity or person information at specific jurisdictions.

Requirement for investors or user for confidential KYC or digital ID verification while maintaining users’ privacy is a necessity from security and confidentiality standpoint. In addition, blockchain system scalability, data storage, network bandwidth & other required computing resources must be specified or updated to adhere IT & Cybersecurity frameworks. Also, jurisdiction specific compliance is a must to excel blockchain specific products and services.

At utmost, government regulatory and law enforcement must be given access to the system nodes to mitigate cybercrime, access must be given to smart contract code for compliance, audit & security, and access to blockchain validators activities and transactions data for transparency, data verification & but not least for taxation purpose to satisfy specific jurisdictions.

Conclusion: - Innovation never stops, it is a civilized culture, a progressive phenomenon within human civilization, so adoption of new technology in a sensible way or common sense is imminent. No doubt, to mitigate gullible and pirates’ issues of blockchain and digital assets trading, at minimum, technology and innovations requires centralized policies, compliance, frameworks, rules, and regulations from collaborated global governments, law enforcement, legislators, and justice departments is a must act, since its inception. One thing is clear that, DLT or blockchain technology is borderless meshed networks, spun across global jurisdictions, so common global frameworks, compliance and policies shall be ease of use and adoptable in mass.