Crypto was born from the desire to create a better, more equitable financial system built atop of an infrastructure that’s inclusive, and accessible to anyone, no matter who they are or where they live.
Since the introduction of Bitcoin in 2009, the cryptocurrency industry has matured far beyond its original concept as a medium of exchange, spawning countless new use cases. Decentralized finance, as these new use cases have collectively become known, refers to a range of financial services that can be accessed by anyone without the involvement of a centralized institution or intermediary, such as a bank, broker, or loan shark.
DeFi, as it’s known, provides banking for the unbanked, or banking without a bank. Its scope goes far beyond simply saving money and sending payments. These days, DeFi refers to a world of cryptocurrency exchanges, automated payments, capital transfers, spot and futures trading, lending, borrowing, high yield staking, liquidity provisioning and much more.
The truly remarkable feature of DeFi though is not the extent of its functionality, which these days has matched – and some say even surpassed – that of traditional finance. Its most important quality is that it can be accessed by anyone at all, without any need for a bank account or identification. Just as impressive, DeFi is designed in such a way that no single entity can have more power over the financial network than anyone else. DeFi is decentralized by design, with matters of governance dictated by the network’s users rather than just a few individuals.
DeFi’s Dilemma
For all of its achievements and promises, DeFi still has a long way to go. According to DeFi Pulse, at the time of writing the total value locked in all DeFi protocols, it tracks stood at just $41.56 billion. That’s far less than some companies even. Apple, the richest company in the world, has a market capitalization of $2.37 trillion in comparison.
DeFi has also been accused of being nothing more than a playground for so-called whales who make up the crypto rich, and the home of abundant scams that simply accept people’s funds then disappear into the sunset, taking their user’s tokens with them.
One of the problems with the DeFi industry is that it seems to have lost sight of its original vision of getting its services into the hands of the people that need them most. DeFi’s potential to bank the unbanked has been written about countless times. One of the biggest problems it can solve…
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