CHAPTER 18

Tokenization, DeFi, NFT and CBDC

“Everything will be tokenized and connected by a Blockchain one

day” – Fred Ehrsam

In this chapter, we will cover some of the Blockchain use cases that

are most widely adopted in the BFSI sector.

18.1 Decentralized Finance, Tokenization and

NFT

Decentralized finance or, in short DeFi, has been the talk of the town

for the last few years. DeFi stands for a group of financial

applications that uses payments in cryptocurrencies in one way or

the other, and hence, leverages the benefits of its underlying

Blockchain technology. Because of its decentralization, DeFi has

introduced certain novel and very complex business scenarios which

could not have been addressed with traditional centralized

technologies.

Business reporter has published that Decentralized finance has

grown to an $80 billion industry in 2021 and is poised to explode

10-fold, according to veteran crypto investor Matthew Roszak.

Often, the DeFi projects are associated with tokens that are the

essence of a DeFi ecosystem. In many ways, the crypto tokens are

similar as well as different from the cryptocurrencies. While the

cryptocurrencies are associated with only digital money, a crypto

token can be a placeholder for either fiat currency, cryptocurrency, or

any other physical asset of value. Both cryptocurrencies and crypto

tokens are associated with the underlying Blockchain layer for

cryptographical security. Each token is also linked with some digital

ownership that one can prove through cryptography. Smart contracts