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In a world where money is power, power is centralized in the hands of those who control money. Dependent on them, the people of the world are devoid of the opportunities while also being unable to do anything about their purchasing power fading away.
If individuals are to determine their own financial futures – and thus their lives – power must be decentralized and returned to them.
Failures of Fintech and Traditional Finance
In a panic to uphold their economies, world governments printed tens of trillions of dollars during the COVID-19 pandemic, consequently diluting the buying power of citizens globally. Now, inflation is on the rise – over 7% in the United States, upwards of 5%in India, and so forth. World governments have made it very clear that they can print as much money as they like, regardless of the cost.
Fintech does as much to reduce access to financial services as it does to increase it. Inhumane automated systems determine insurance rates, big players on Wall Street are in control of the markets, financial institutions harvest people’s activities for their data, and governments take a piece of every dollar that citizens earn before they’re even paid.
But that’s only for those lucky enough to have access to financial services in the first place. While bank accounts and loans are common in Western countries, many people have no financial access at all. To the unbanked, college loans, home ownership, insurance coverage, investing opportunities, and stable pay are all unfamiliar privileges.
A New Financial System
DeFi stands for Decentralized Finance, a new type of financial system in which individuals use cryptocurrency to provide financial services to each other, without the need for centralized authorities or intermediaries (like banks and escrow services).
DeFi is powered by blockchains, decentralized records of transactions, and smart contracts, bits of software that run on decentralized computers and enforce agreements in cyberspace. Together, blockchains and smart contracts enable trustless financial cooperation, in which all financial agreements are automatically enforced. This eliminates the need for banks, credit agencies, loan officers, and escrow accounts. Blockchain and smart contracts replace them all, removing middlemen, making finance more efficient, and lowering barriers to entry.
Because DeFi is decentralized (or at least to a certain extent), nobody can prevent others from joining. Anybody can visit a DeFi platform in their browser and instantly gain access to cryptocurrency trading, Peer-to-Peer loans, and high-yield saving programs. Here are some additional benefits of DeFi:
- The unbanked can use DeFi to bank themselves.
- DeFi allows individuals to earn passive income by providing services to others.
- There are no credit scores, meaning that all people have equal access.
- Growing DeFi ecosystems themselves act as major investment opportunities.
So then, why hasn’t DeFi caught on? The truth is that DeFi is new, and some of the kinks are yet to be worked out. While the engineering behind DeFi platforms is safe and secure, most are difficult to understand and use. This is where DeFiChain, a people-oriented DeFi platform, can help.
DeFiChain believes in empowering individuals and understands the needs of users. This pushes them to create fast, intelligent, and transparent decentralized financial services that are accessible to everyone. Some of its features include:
- A secure platform built on Bitcoins principles
- A thorough learning platform with easy-to-understand DeFi guides and educational videos.
- A fully-fledged computer app that can be used to exchange tokens and liquidity mine
- A platform for users to mint stock-based tokens, providing users with exposure to securities.
Little Victories of DeFi
While it hasn’t hit mass adoption quite yet, DeFi is making waves and generating buzz. Brands like Adidas, Coca-Cola, and several others entered the DeFi NFT space. Bitcoin ETFs have seen a few successful launches around the world. Homes are selling through the blockchain. Sports teams score sponsorships from cryptocurrency projects. And El Salvador adopted Blockchain as legal tender. DeFi victories pop up everywhere, and the world slowly becomes a freer place.
The views and opinions expressed in this article are solely those of the authors and do not reflect the views of Bitcoin Insider. Every investment and trading move involves risk - this is especially true for cryptocurrencies given their volatility. We strongly advise our readers to conduct their own research when making a decision.