People often talk about all things important – politics, feminism, global warming, and even the economy. But one of the major things people miss out on is understanding the need for independence in managing their own assets.
For most of us, this is just a mutiny against the banks, centralized financial institutions, and the government. But for all of us, this is the chance to stand up for the basic fundamental right of financial sovereignty.
Many outside the crypto-industry wonder why they need to care about Bitcoin or what’s the whole point of decentralized finance while things are working perfectly with fiat. Honestly, you don’t need to care about Bitcoin and DeFi. You need to care about your wealth, your privacy, your management, and your ownership for it [and no, things are not perfect with fiat].
What is DeFi?
Gone are the days when we stood in long banking lines, fought with collectors, saved up some bucks off-record and worried about our funds every time the fiat value decreased or recession came in.
Now, entrepreneurs can recreate traditional financial instruments in a decentralized architecture, outside of companies’ and governments’ control including theirs.
This indicates how you can have the flexibility of lending, loaning, paying, storing and managing your own wealth with no central authority monitoring everything you do.
And no DeFi is not FinTech.
FinTech is about technological advancement in finance that brings in the most centralized point of management to manage your funds in the most proprietary way possible.
This gives a really good customer experience but all of it is centralized. Of course, you can manage your funds really easily but this centralized financial institution has a record of all your transactions, your history, your device details and at any time can freeze or seize your account for whatsoever reason they think is valid. There is no cryptographically guaranteed immutability of transactions, the entire system is based on a massive political risk and the FinTech space is constantly jeopardized at risk of being de-platformed.
When it comes to DeFi, it focuses on creating a decentralized ecosystem using cryptocurrencies, tokens, wallets and other financial infrastructure based on blockchain and DLTs.
DeFi is an opportunity to create a financial system completely different from the previous one. Which can exist together with traditional banks and financial technology companies without being integrated into them.
We can create a completely alternate financial system which is similar to the current one on the front-end but extremely different on the back. It can co-exist with traditional banking channels, current FinTech solutions, and the centralized finance monitors.
How does DeFi work? It works in multiples ways for various use cases.
Let’s pick up OmiseGo [OMG] for payments; it provides interoperability and scaling solutions for payments over Ethereum. As its tagline goes it unbanks the banked. This simply means that it enables financial inclusion and interoperability through the public, decentralized its network. [OMG, really?]
OmiseGo works towards providing the solution to the fundamental coordination problem among payment processors, financial institutions, and gateways – all of this while still being decentralized.
Stable coins go by its name they’re literally stable that means there’s hardly any fluctuation of these coins as they are backed or pegged to fiat/gold reserves.
For instance, Paxos [PAX] is a stable coin, it combines the stability of the U.S. dollar with the efficiency of a blockchain. Through this stable coin, one can easily send and receive US dollars throughout the world from anywhere to anywhere in no time. You can use PAX to pay in dollars for goods and services with a low [almost none] transaction fee. Additionally, you can juggle between multiple cryptocurrencies and US dollars using PAX [Talk about US dollars actually helping to accelerate financial independence].
Infrastructure covers a broad spectrum of necessities to conduct operations. In such an ever-growing field DeFi is building the footing for the betterment of future innovations.
For example, FOAM!
As interesting as it could get, FOAM provides secure and transparent location data. It has developed tools to enable crowdsourced map and decentralized location services.
The stock market, supply chains, the airline industry, the electrical grid, communication networks and more rely on GPS.
Many of the leading industries and marketplaces such as the airlines, electronics, stock market, etc rely on GPS for their day-to-day tasks. While GPS is not tamperproof, it’s vulnerable to hacks and malicious data inputs which makes the network of many industries critical and their infrastructure, unprotected. Here’s where FOAM helps, it provides location verification with an alternative, fault-tolerant system that works through an open network of terrestrial radios that anyone [node] can operate.
Liquidity refers to the level a particular asset can be traded in the market at a price that is equivalent to its intrinsic value basically it’s just the ease of conversion.
In the current era, if you have some US dollars, some euros, some INR and some Yuan it’s a ride to hell to get it converted [plus the conversion costs]. DeFi here introduces a simple way to sort your worries on liquidity out.
Kyber Network is one of the biggest players in the liquidity industry.
Kyber is basically, an on-chain liquidity protocol. It collects liquidity from a wide range of reserves, powering instant and secure token exchange in any decentralized application [dApp].
It accelerates DeFi by giving people the chance to build their own innovative applications and interact with their protocol implementation to leverage the shared liquidity pool — “creating a world where any token can be used anywhere”.
It’s a hassle every time one needs to give out credit or get some debit. It takes days of identification, verification, and meaningless back and forth to finally lend or get a loan. Plus, all your personal data just goes out there in the open for multiple companies to play with and exploit.
ETHlend is a crypto lending platform where one can take loans by keeping their cryptocurrencies as collaterals and have receive funds in no time.
A user can take a loan literally under a click from the marketplace or request a new one with their own terms. The open marketplace enables the most competitive interest rates and boom you select what suits you.
Further, your funds are stored on a non-custodial smart contract and everything else is regulated by code and not a centralized authority.
The entire point of this is to accelerate the adoption of cryptocurrencies even in the credit/lending field.
Additionally, it is extremely important to understand that DeFi started with the decentralized space built around blockchain and cryptocurrencies. It cannot be disintegrated until there’s one particular global currency that takes over every, entirely [Hint: Accelerate Bitcoin adoption].
If you guys have any questions related to DeFi or the companies accelerating it, please feel free to send in a Hi/Hey/Holla to me on my email or social media handles!
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