The DeFi And NFT Spaces Have A Problem: FIAT

2021 alone, the NFT market cap rose by over 1,700%, similar to the explosion in the DeFi market in 2020. Now more than ever, the crypto industry is faced with unfettered demand for blockchain-enforced ownership and economical solutions designed for digital assets.

But there is a catch. Investors, artists, content creators, and collectors alike must acquaint themselves with emerging crypto-financial templates and the constraints that come with them to unlock the NFT and DeFi markets.

It is easy to see why such a requirement may seem inconvenient for the general population, most of which may not be well versed with the field. With this in mind, it has become necessary to highlight the importance of fiat gateways in the NFT and DeFi movement.

The underlying technology of NFTs and DeFi devises a viable means of materialising some of the essential characteristics of banks and real-world assets in the digital world. With NFTs, it is easier to trace and confirm the ownership of digital items. It is also possible to establish the rarity and uniqueness of such items, retaining a sustainable value.

On the other hand, DeFi brings exciting and high-yielding financial paradigms, albeit with a large degree of autonomy. The growth potential of NFTs and DeFi is currently being fueled by mainstream interest in these innovations.

More celebrities endorse NFTs, providing them with a new and exciting channel of interaction with fans while giving them more control over their brand.

There is also the mainstream acknowledgement that Christie's involvement in NFTs gives this emerging sector. For a legendary auction house to welcome the idea of blockchain-based digital art, it is clear to see why the concept of NFTs are fast becoming a mainstay in the art world.

In the case of DeFi, investors are increasingly looking for ways to enjoy the financial possibilities associated with DeFi solutions. These opportunities provide alternative investment strategies, which are more profitable than the current low-interest rates of traditional investment options.

Notably, the growing appeal of NFTs and DeFi also raises some questions. One is the lack of fiat gateways for NFT and DeFi protocols. Many established NFT and DeFi platforms utilize decentralised architectures, meaning users have to execute trades using cryptocurrencies. To most, this is even a more daunting task if ETH or other Ethereum-based tokens are the primary payment options, as network congestion often causes transaction fees to rise astronomically.

Caught between the complexities of buying cryptocurrencies and the security requirements of holding digital assets, NFT and DeFi users also have to contend with such assets' price volatility.

As such, it is vital to acknowledge that some may not understand crypto entirely. However, they may withhold an interest in acquiring NFTs to collect exclusive items from their favorite musicians, athletes, and artists.

This is also true of investors, who are more concerned about DeFi yields than all the moving parts involved in facilitating crypto loans. This is why stakeholders and developers are working relentlessly to improve the user experience for NFT and DeFi platforms .

For instance, Coinburp, the UK's leading crypto trading platform, according to Trustpilot, has created a revolutionary new NFT wallet app that will soon be compatible with fiat payment options.

The startup has capitalised on its fiat knowledge, regulatory backing, and strategic partnerships to bring CeFi or Fiat gateways to NFT and DeFi. Already, the app allows direct top-ups with credit/debit cards to purchase NFT-based digital assets on Avastars, Sandbox.game, OpenSea, and NFT Boxes.

For Coinburp, integrating conventional payment systems is one way of establishing an enabling environment for NFT and DeFi users. I have a vested interest in the platform since I use Coinburp daily. 

Similarly, Karinna Nobbs, co-founder of THE DEMATERIALISED, recently commented that fiat is an essential onboarding requirement for the emerging fashion NFT market. She explained that most fashionistas do not own digital asset wallets. Therefore, it has become necessary for fashion brands looking to adopt NFT systems that process both crypto and fiat.

This notion also rings true in the sports industry with its growing interest in NFTs. Platforms like NBA Top Shot are increasingly normalising NFT sports collectibles while delivering new income opportunities for the sports franchises.

The emergence of such initiatives unlocks new sporting experiences for billions of sports fans worldwide. However, for NFTs to become a globally accepted sports initiative, NFT processes must improve and become seamless. Without any doubt, this would entail the implementation of fiat gateways.

As for DeFi, developers must create viable bridges between the decentralised world and the traditional financial system. This will allow more investors to access DeFi protocols without time-consuming and expensive processes.

Before the current drive for fiat DeFi channels, investors had to buy Ethereum or Bitcoin with fiat before exchanging them for DeFi tokens. Ultimately, the integration of fiat channels promises to bring more liquidity to the DeFi market.

It is easy to hide behind digital currencies' growth potential and pretend that these systems are sufficient to fuel NFTs and DeFi into mainstream status. Although cryptocurrency offers compelling improvements over traditional payment systems, it is still very much an emerging financial order that is yet to capture the majority's hearts.

And hence, the NFT sector, much like the DeFi market, needs to integrate purposefully with centralised finance to have a realistic chance of mainstream adoption. Until then, both sectors' growth will be constrained by the size of the crypto industry, even though they seem to have attracted the interest of a broader audience.