The demand for cryptocurrencies continues to grow as more bankers make the switch to DeFi (decentralized finance). DeFi protocols eliminate the bank and replace it with pure code. As such, smart contracts regulate financial activities which eliminate the need for human intervention. Consequently, it’s much cheaper to operate these networks and users earn higher rewards.
The Old Way
The current centralized financial system is both inefficient and expensive. For example, if you go into your bank today and ask for a loan, you will need to provide a plethora of personal information, as well as, plead your case to a loan officer. This individual will review your documentation and their judgment to determine if you deserve access to the funds.
DeFi protocols eliminate the gatekeepers from the equation. There are no loan officers, clerks, or even managers to void, confiscate, or block your transactions. These networks operate in a permissionless manner. For example, P2P lending protocols enable you to access funding as soon as you meet the collateral requirements. This approach is beneficial to everyone because it provides a way for the billions of under-banked and unbanked people in the world to enter the global economy.
The People Want Transparency
The people want more transparency from their financial institutions, regulators, and lawmakers. Sadly, the centralized financial system was built specifically to deny them the insight they need to ever truly gain an understanding of the big financial picture. The average person lacks the skills to gather and assess complex financial data to gain an oversight of the health of their monetary system.
Cryptocurrencies like META 1 enable the community to monitor the health and transactions of the network for free. Blockchain explorers are a valuable tool that allows you to check data such as the overall transactions volume of the network for the day. You can also verify that payments have been sent and received using this service. Blockchain technology eliminates the fog surrounding finances and empowers regular users to become more involved in their financial future.
Sending fiat currency with your bank is a slow and expensive task. For one, the remittance sector has large players that dominate the sector. These firms have a near-monopoly on money transfers. This centralization has led to high fees and other actions that hurt the average client. These fees are a combination of regulators, verification systems, and bank actions.
Each of these steps adds a delay and expenses to the overall total. It’s no wonder the average cost of sending money internationally is 7-10%. Cryptocurrencies can be sent globally in a frictionless manner. The peer-to-peer technical structure of networks like META 1 means that your payments are directly sent from user wallet to wallet. This approach eliminates the delays and the extra costs. It also provides users with more flexibility in terms of how and who they pay.
Crypto Beats Your Bank Hands Down
It doesn’t take long to see all the reasons why people continue to join the crypto revolution. Cryptocurrencies like Bitcoin and META 1 continue to reshape the global economy and what it means to be “money.” These projects take the focus away from building profits for banks and instead, share the returns with the community. As such, you can expect to hear a lot more about DeFi in the coming months and years.