One of the best ways to see the potential of DeFi is to understand the problems that exist today.

  • Some people aren’t granted access to set up a bank account or use financial services.
  • Lack of access to financial services can prevent people from being employable.
  • Financial services can block you from getting paid.
  • A hidden charge of financial services is your personal data.
  • Governments and centralized institutions can close down markets at will.
  • Trading hours often limited to business hours of specific time zone.
  • Money transfers can take days due to internal human processes.
  • There’s a premium to financial services because intermediary institutions need their cut.

A comparison

DeFiTraditional finance
You hold your money.Your money is held by companies.
You control where your money goes and how it’s spent.You have to trust companies not to mismanage your money, like lend to risky borrowers.
Transfers of funds happen in minutes.Payments can take days due to manual processes.
Transaction activity is pseudonymous.Financial activity is tightly coupled with your identity.
DeFi is open to anyone.You must apply to use financial services.
The markets are always open.Markets close because employees need breaks.
It’s built on transparency – anyone can look at a product’s data and inspect how the system works.Financial institutions are closed books: you can’t ask to see their loan history, a record of their managed assets, and so on.
See Also