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Why DeFi: The Setbacks of the Traditional Finance System

Ezekiel Inyang

Blockchain Content Creator || Poet Jan 31, 2023

Why DeFi: The Setbacks of the Traditional Finance System

Technological advancements have been one of the hard drives of human financial evolution. This development dates back to the invention of counting machines with punch cards in the 1920s. Following this evolutionary trend was Harvard's Howard Aiken's Mainframe Computers invented in the '30s but, adopted into the financial system in the 1950s.

In addition, the 1970s saw both the invention and introduction of ATMs, credit cards as well as the stock market. With the invention of the internet was the computerisation of finance known as FinTech which incorporated previous transactions into one entity. These served as arbitrary systems between centralised financial institutions and businesses such as PayPal, Robinhood, Flutterwave etc.

Nevertheless, these innovations were still subtly the same - centralised.

Setbacks of Traditional Finance Systems to Businesses.

If you're a business owner, start-up entrepreneur or SME outlined below are some setbacks you've experienced or are experiencing with traditional financial systems:

- Delay in stock/bonds transactions
- Restriction on Financial Services
- High Costs of International Transactions
- Unequal access to Financial Services

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Ezekiel

Ezekiel Inyang

Blockchain Content Creator || Poet... Show more

Location
Lagos, Nigeria
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Blockchain Content Creator
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Oct 22, 2022

More posts fromEzekiel Inyang

If you've seen the movie - "Sneakerella" by Disney Studios, then you already know what non-fungible tokens are (at least in their basic sense) - they are one-of-ones. And all around us, we're surrounded by these NFTs in the forms of relationships, images, patterns, and even numbers. For instance, when you go pick up your kids at school, you don't go there to pick up your neighbor's kids, do you? In that sense, your kid depicts what nfts are - one of one's. Even if you had a set of twins they couldn't be the same - Taiwo would never be Kehinde and vice versa. Neither would Messi be Neymar Jr. Even though both were South Americans who played for the same club, Paris-Saint Germain (PSG).

As stated by EkoLance, Non-fungible tokens (NFTs) are cryptographic assets that are one-of-a-kind and have varying degrees of rarity, making them available in limited editions. Based on origin and utility respectively, non-fungible tokens are digital creations of the web3/blockchain ecosystems. Which are ever-increasing in serving as channels for unique assets. Represented in the forms of digital arts, video clips, memes, GIFs, music, or poetry as well as any other artistic or intellectual properties. In this article, I am taking you through 4-Dimensions in the evolution of non-fungible tokens namely; The Hype, The Adoption, The Implication and The Regrets. I'll split this under four subheadings for easy comprehension and then with a conclusive point-of-view: IS NFT TECH OR ART?

The Hype

Here's what hypes look like:

News Flash!

"Beeple sells an NFT for $69 million".

"Jack Dorsey's first ever tweet sells for $2.9m".

"CryptoPunks NFT collection crosses $1 bn in total sales".

"Obscure altcoin mana spikes 400% as Facebook's metaverse pivot spurs bet on virtual property token".

And it's not long before a fear-of-missing-out (FOMO) syndrome which affects most newbies in the web 3 space clings to your mind. Then the thought comes to mind: "buy 'em NFTs while the market's popping hot!!!" Right? The exact response of naivety. And this is where the walls of Troy come crashing down on you.

In the primary sense of the word, hype is, "promotional publicity of an extravagant kind" (Merriam-Webster Dictionary). In one word, hype is "noise" about something. And that's just what it is. There's no such thing as a good hype or bad one but there's "shilling", which we'll talk about later. This is why the acrostic DYOR - do your own research - exists in the blockchain space, to save investors from unnecessary heartbreaks. Notwithstanding, what organically promotes the hype around non-fungible tokens? Is it fundamental, technical or sentimental?

In a recent study carried out by Christian Pinto-Gutiérrez et alia on "The NFT Hype: What Draws Attention to Non-Fungible Tokens?", one interesting fact caught the eye of this subject. That is, it was discovered that "Google search activity for the topic “non-fungible token” and “NFT” is positively associated with major cryptocurrency returns" (Christian, 2022). In other words, the rise in returns on Bitcoin investments also known as a "bull run" led to increased interest in non-fungible tokens. Also, this trend seemed to flow in concurrent parallels with the heat surrounding who the next president of the United States would be at the same time in 2021. This observation was also made by the co-authored efforts of Tiana Laurence and Seoyoung Kim in NFTs for Dummies here:

"Google search trends within the US show that Googlers are now as curious about Bitcoin as they are about the country’s new president, and interest in NFTs has naturally surged with the Bitcoin tide."

And the same was true for specific NFT collections, such as “Cryptopunk” and “Decentraland”. However, the hype continues and it sure gave birth to something more concrete - nft adoptions.

The Adoption

It is primary info that NFTs were part of, but the least expected applications built on the Ethereum network outstripped its creators. Vitalik Buterin one of the founders asserts:
“NFTs are probably the one thing that I did not predict, by the way. If you look at the list of applications that were in the Ethereum Whitepaper, and you look at the applications that are popular today, the big thing that’s in the second list and not the first is NFTs.”

Although, "NFTs can credit their existence to CryptoKitties (www. cryptokitties.com), a novel game that was launched in the fall of 2017, by Dapper Labs" (Tiana & Seoyoung, 2021), NFTs first emerged in the space as digital artworks in the form of avatar collections such as CryptoPunks and later advancements began to explore other sectors where NFTs can be used such as

• In real estate (Decentraland) or a proof of ownership of physical land.
• In the fashion industry: Dolce and Gabbana - Alta Moda Collezione Genesi NFTs on UNXF
• In the music industry: King of Leone Band
• In education: EkoLance certificate of completion… (EkoLance 24 Days of Blockchain Advent Calendar, Day 11: "Non-fungible tokens).
• In book publishing: Readl which is built on the Polygon network provides writers the opportunity to publish their books as NFTs and create new revenue streams while protecting their creative rights.
As governments and major financial institutions began to accept Bitcoin and Ether, especially after El Salvador Repaid its $800 Million Bond despite adopting Bitcoin, non-fungible tokens will see more areas of adoption.

Just a little about Cryptokitties…

Here's the plot of the Cryptokitties NFT that sets me aback. CryptoKitties are unique cat NFTs that can breed i.e produce other NFTs, however of different kinds - as one of one's. As stated by the investor and professor, Tiana Laurence and Kim Seoyoung:

"CryptoKitties not only introduced the world to NFTs but also introduced NFTs that could make their own NFTs".

It even gets more exciting that the cryptography behind this set of NFTs was genetically engineered in a laboratory known as, Dapper Labs. In a sense, what CryptoKitties as NFTs did to the web 3 ecosystem was to simplify the understanding of the technical processes of the same technology which backs cryptocurrencies - the blockchain. For instance, crypto kittens breeding explains the mining process evident in the PoW consensus mechanism of Bitcoin and other proof of work networks.

Finally, playing the Cryptokitties game doesn't require coding knowledge just like its metaversian counterpart, The Sandbox Game Maker. Yet, there are many more consequences to the adoption of NFTs.

The Implication

The birth of NFTs is rapidly changing how we've conceived the world of digital arts, medicine, certifications, and real estate. A new economy is being forged at its dawn for creators known as the emerging creator economy .
Work Distribution: As an afterthought, EkoLance is currently working with the HUMAN PROTOCOL to "revolutionise the work distribution ecosystem and exchange of knowledge, funds, work and contributions on chain" (bearing in mind EkoLance issues NFT certificates to those who have completed its course) and trained 1000+ individuals.

Think: Imagine holding a pool where a set of 100 NFT Certificates trainees in the Set={Content Creators}, were picked using the HUMAN PROTOCOL. Or in the area of education where access is granted to some specialised courses by holding some specific NFTs? Also, imagine what work would be like when creators can upload their portfolios on dynamic NFTs.

In concluding this segment, however, imagine using a social media post that is tokenised as collateral Defi. Or think of gifting a loved one voice notes status feature on WhatsApp tokenised as non-fungible tokens. It's mind-blowing. The boundaries are endless and so has the notoriety of NFT scam artists seen opportunities in the vulnerability of this digital creation known as NFTs.

The Regrets

Remember, Shilling - a word I mentioned earlier? Earlier:

"There's no such thing as a good hype or bad one but there's "shilling", which we'll talk about later."

Well, here's me keeping my word. From newbies to OG's everyone has had a fair share of sad notes in the blockchain space. For starters, it's shilling. So what's shilling or what does it mean when an NFT has been shilled?

Shilling is the process of someone heavily advertising a token or cryptocurrency (which has no special utility) with the aim of selling it at a higher price. It is the first part of pump and dump schemes - a type of scam in which the fraudster buys a coin or token and then artificially inflates its price using false and misleading positive statements to sell it thereafter at a higher price. Usually, the perpetrators of this mischief have either helped in developing the project or have something to gain, so they bait their victims with the falsehood of high returns on investment. One of the strong voices against this is nftnate.

Epilogue: Is NFT Tech or Art?
Many times there's confusion as to what NFTs are and what they were designed to represent. Remember me saying NFTs are one-of-one's? Well, I wasn't wrong but there's a more techy aspect to this you need to know.

"An NFT is a cryptographically secure digital record that verifies your ownership of or access to, say, a piece of digital art".
Laurence and Kim

Let's use an instance I mentioned earlier. When you go pick up your kids at school, you don't go there to pick up your neighbour's kids. What if on some day a random guy walks up to you and says, "I came to pick my kid up, thanks for all you've done for him all these years" - would you let that pass? Definitely not. With all the dramas which will ensue, of course, there's only one place it can be proven that Jerry is your kid - in the labs. A blood sample from you and the strange guy as well as Jerry's is taken to the lab and the test is for a match in a certain string of codes known as DNA. Do you pass? The lab issues a medical report stating, "Jerry is your kid", Voila! Jerry is still your kid. What am I trying to say?

Just like that medical report issued by the lab, the NFT is not really Jerry in this case but, the medical record issued by the lab stating Jerry is yours because of a match in DNA. That record is what verifies he is yours. However, such records can be manipulated which is what brings NFTs in handy because nonfungible tokens are not just digital records but cryptographically secure, in other words, stored on the blockchain - Ethereum in this case. More importantly, there can be no other NFTs stating Jerry belongs to someone else. That's why we call it - one of one's.

For partnership and collaboration DM me on any of my social handles 👇

LinkedIn: Ezekiel Inyang

Twitter: Ezekiel Inyang

Ezekiel Inyang

Dec 16, 2025

In the book NFTs for Dummies the synergy between the high tide of Bitcoin and the birth of NFTs is expressed thus that "interest in NFTs has naturally surged with the Bitcoin tide". The birth of this digital creature has met several innovations and emotions "With wild and exciting accounts of art-burning ceremonies and million-dollar NFTs, a mix of amazement, confusion, and even disdain". For instance Vitalik is reported to have given this remark of NFTs.

He said:

“NFTs are probably the one thing that I did not predict, by the way. If you look at the list of applications that were in the Ethereum Whitepaper, and you look at the applications that are popular today, the big thing that’s in the second list and not the first is NFTs.”

Ezekiel Inyang

Dec 16, 2025

The Hype - Introduction

It's apparent that non fungible tokens seemed to get much attention between the first and second quarters of 2021 to the fall of that same year, especially after Snoop Dog and Eminem took their fans to the virtual stages of the metaverse. In addition, Bored Ape NFTs seemed to raise some attention too as "The NFTs were originally sold for 0.08 ether each, around $190 at the time of their April 2021 launch and were sold out in 12 hours", according to Wikipedia. However, who made first appearance in the use of NFTs, what problems do NFTs solve that gives it competitive advantage over fungible tokens and what's the main purpose of non fungible tokens in the Web 3 Space and how is it set to change how things are being done in the world of finance, medicine, education, and arts etc as these have been proposed main use cases of the Blockchain Tech. Beyond the hype we'll look into such details in coming bulletins on NFTs.

Ezekiel Inyang

Dec 16, 2025

The breakthrough of Nakamoto's genius has left us clues to what new paths we can tread in the name of true freedom. This disruptive technology known as the blockchain has ushered us into a very dynamic and fast paced ecosystem known as the token economy alongside its pros and cons. The science of this economy is known as Tokenomics.

What is Tokenomics?

In a basic and crude definition, it is the economics of tokens, their creation, utility and distribution. According to Maximilian Gutsche however, Tokenomics is the science of using token incentives to coordinate people to do something in a decentralised system such as to co create, co-invest etc More so, like every economy the token economy is driven by certain factors.

Dimensions of the Token Ecosystem
These factors according to Maximilian are as follows:
1. Ecosystem Evaluation
2. Token Design
3. Supply
4. Team & Investors
5. History
6. Demand
7. Sustainability
8. Business Model
9. Technology
It might interest you to know that these dimensions serve as salient roadmaps in Writing a Whitepaper.

For partnership and collaboration DM me on any of my social handles 👇

LinkedIn: Inyang Ezekiel

Twitter: Inyang Ezekiel

Ezekiel Inyang

Dec 16, 2025

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