Recently, we observed that PayFi, a topic that has recently surfaced to stardom, is becoming one of if not the hottest topic around. The concept evolves beyond the original scope of DeFi and instead creates a focus on the time value of money. Let’s look at what PayFi is all about and how it’s shaping up to be the next major development in the crypto world.

What is PayFi?

PayFi, which is the combination of Payment and Finance, is a concept that revolves around the time value of money. When Bitcoin first came into the world, the idea was to have it develop into a whole new system of payment that would replace traditional finance as we know it. Bitcoin, at least so far, fell short of that vision and turned into yet another valuable asset/currency that has little to no utility. PayFi is here to continue on the previous vision set up by Satoshi Nakamoto and bring it back to life.

As pointed out when the concept was first introduced, the key value behind PayFi is time, or the ability to utilize time. This involves the ability to carry out financial actions based on time and to establish a system of programmable currency that evolves beyond what we already know about traditional finance. PayFi allows for complex settlements or trading where time can be leveraged in your financial actions and time holds value.

Programmable Currency and Time

Programmable currency, normally,  are digital versions of a country’s fiat currency where the currency can be manipulated and controlled via smart contracts. Stablecoins and various crypto have also become suitable alternatives for this. Complex settlements that build off of programmable currency makes it so things are no longer limited to simple pay-and-gets. You would gain more options for payment where you can leverage both time and different digital assets to complete your transactions and settlements.

Some easy-to-understand examples would be the idea of “Buy now but pay later” where you use tomorrow’s money today or to leverage payments to get products/services immediately. You can essentially buy things with your “future earnings”. Big businesses can also leverage time and better their cash flow via instant transactions whereas they wouldn’t be able to do so in traditional finance. Overall, PayFi simply establishes a flexible system where consumers have more options at their disposal.

An Old Idea Made New

The importance of merging time and money isn’t new but PayFi takes this concept and evolves it. Through smart contracts and blockchain technology, PayFi allows for these actions and transactions to be programmed and tokenized, making it so we can easily carry them out or utilize them in a way that’s marked by the transparent and immutable nature of blockchain technology. 

Next, let’s touch on how PayFi can truly benefit us and why it can be such a big deal.

Why PayFi? What are the Benefits?

DeFi was all about financial services via decentralized platforms but PayFi takes it further and adds a new layer to crypto finance. The impact it could have is monumental. Here are some benefits and examples of PayFi:

Instant Transactions and Better Cash Flow: To understand the value of instant transactions, one must understand how it currently works for traditional transfers. Currently, transfers within banks or between banks can be instantaneous. This, however, can change if the transfer amount is large or if you are transferring internationally or across borders. This raises situations where the delay caused by not having instantaneous transfers or transactions can cause issues such as value loss. It’s important to note that instantaneous transactions or settlements can be especially crucial in speculative trading or other similar activities.

The ability to have transfers done immediately can be vital for many businesses and PayFi can help attain that. Through allowing instant transactions, PayFi could enhance and improve cash flow for businesses across the globe. PayFi is a solution that many businesses and individuals wanted but have, so far, not found until now.

Buy Now Pay Later/Never: We’ve all heard of installment payments, and the ability to pay little by little. PayFi would also allow for this but it can go even further with an added twist of having the option for “Buy Now Pay Never” as stated in this article. “Buy Now Pay Never” utilizes locking your asset, as you would when you stake crypto or contribute to liquidity, and paying off your purchases with the interest you earn. This uses programmable currencies where smart contracts would enforce the “rules” in this payment method and allows for flexible financial actions based on time.

The possibilities are endless as you gain the ability to leverage your assets in a variety of manners to not only serve as payment options but also potentially as new sources of revenue.

Security and Transparency: This is the hallmark of blockchain technology. Some methods for instantaneous transactions exist through platforms like PayPal but the integration of blockchain technology for PayFi offers an added layer of security and transparency. The smart contracts involved in setting up programmable currency are transparent, the system will be transparent, and the cash flow from beginning to end will be transparent.

When it comes to money, the capability to provide transparency and security is invaluable. Blockchain technology exists for these reasons and what it offers for PayFi can truly take finance and traditional platforms to the next level.

What is the Relevance?

So, why are we talking about PayFi? PayFi’s emergence is a mix between the rapid growth of sectors such as stablecoins and DeFi, good timing, and a dream of adoption.

Stablecoins and DeFi

Stablecoins have established themselves as a titanic market that offers a base foundation for what a crypto-based payment system would need. At the time of writing, stablecoins such as USDT and USDC have a market cap of over $171 billion combined. Their massive presence serves as the perfect asset to be utilized in the development of better and more complete PayFi solutions.

DeFi, on the other hand, presents PayFi with the fundamentals of the blockchain world. DeFi reinforces a unique characteristic where major focuses are placed on interoperability, programmability, and composability. These are focuses that PayFi will need in order to bring the complete vision to life. By learning from how DeFi has developed over the years, PayFi will have blueprints for replicating certain aspects of DeFi for faster and better development.

Timing

Another big reason for the seemingly sudden relevance of PayFi is due to timing.

Currently, we are in a period where we aren’t exactly in a bull or bear run. Everyone is looking for what will ignite the next cycle and with projects like Bitcoin Layer 2s losing popularity despite their strong start at the beginning of the year, PayFi has taken over and looks like the next big thing. 

Adoption

One last reason we will give for why PayFi has become so relevant is their tight connection to making mass adoption happen.

Mass adoption is and has always been one of the ultimate goals of the Web3 world. By improving traditional finance concepts, which is relevant for everyone around the world, with blockchain technology, we can truly start integrating Web3 into our daily lives. This isn’t just about having the option to pay with crypto, it’s adopting a whole system that’s made better because of crypto.

Whether PayFi will truly become the core of the next run or grow to the potential we believe it has is yet to be determined but the potential is definitely there and it seems like a development that’s only natural when looking at what the crypto world has done so far. More development revolving around PayFi will continue to pop up in the coming days and it’s exciting to see where it all goes.

About ThunderCore

ThunderCore is an EVM-compatible blockchain featuring a breakthrough consensus protocol, PaLa, allowing lightning-fast efficiency. With users in more than 100 countries, this blockchain emphasizes a growing global reach. ThunderCore offers a native currency, TT, and nurtures an innovative ecosystem within the TT Wallet mobile app.

What’s Next?

ThunderCore has been busy innovating on our next step in this constantly changing landscape. With new developments forming in payment and the emergence of different projects with unique goals, ThunderCore is also looking to make a new splash that will take the Web3 world by storm. Look out for more from us and keep an eye out for the next ThunderCore blog articles!