Why I’m excited about DeFi – and yes, Crypto – It’s a better Finance

Finance is being reimagined by DeFi & crypto technologies. This presents opportunities to generate 10X improvements and release trapped value in the Real World.

Finance is being remade

Finance is being reimagined by Blockchain/DeFi/Web3 and crypto technologies. However, the biggest change doesn’t come from new technology, but from a new way of thinking about Finance: a financial system built without intermediaries (who in many countries operate under outdated legislation that heavily favors incumbents, and/or provide the wrong incentives), a new way of establishing trust (via a distributed consensus), and how to execute agreements (automatically via smart contracts without depending on a country’s legal system). This presents new opportunities to generate 10X improvements and release trapped value in the Real World.

How it’s better

The New Finance is open (anyone can build new applications), global (anyone in the world can have access), transparent (all transactions are recorded publicly), accessible to many more people (it literally costs nothing), and it is also much more flexible, allowing for a more open innovation model by easily combining protocols (through composability). 

What’s the Vision

The Vision is open & global finance and capital markets, especially to make them available to the large proportion of people and businesses in the world that currently don’t have access to or are underserved by them. In other words, democratize (vs. privileged) access to capital.

[As an aside, this is not a call for no regulation, but to define rules taking advantage of the possibilities offered by new technologies instead of instead of retrofitting new technologies to old concepts.]

How it will be adopted

Many aspects of Decentralized Finance are still a work in progress, but it is already better than the options available to many people in countries where financial systems are underdeveloped or focused on a richer segment of the population; the key point is that it is already solving problems in the Real World (see examples below). It is completely possible that DeFi will leapfrog Traditional Finance in many countries, just like mobile phones in Africa and digital payments in China leapfrogged landlines and credit card payments, respectively. 

In rich countries, where Finance is more developed and use cases are more complex, there are still many issues to figure out, but if history teaches us anything is that the technology will keep improving and it’s possible to see how DeFi will not only replace cumbersome processes (like settlement of securitiesmore open private markets, and so on), but also expand access to the large portion of people and businesses who are still underserved even in developed economies (think of small businesses and people with lower incomes).


Here are some examples of Real World Problems that DeFi and crypto are solving today, where existing solutions are either too expensive or not available to most users who need them:

• Bitso: cheaper, faster remittances.

• USDC: saving in (digital) dollars from any country.

• CitaDAO: expanding access to real estate for everyone.

• Agrotoken: using tokenized grain as collateral to finance purchase of supplies.

• Addem Capital: tapping global sources of funding for businesses.

• Goldfinch: financing of unsecured loans on emerging markets.

• Centrifuge: much cheaper borrowing using Real World Assets as collateral. 

What’s Next

So What’s Next? Get started and use it to solve more existing real world problems, then keep improving and adding more and more use cases until the vision of Finance for everyone becomes a reality.

#defi #blockchain #crypto #web3 #finance

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