BLOCKCHAIN NEWS: 2020 and the Motion Towards Decentralized Finances
What is DeFi or Decentralized Finances?
Decentralized finance (known as DeFi, for short) is a brand-new monetary system being built on public blockchains. Take Bitcoin and Ethereum, at first glance cryptocurrencies, but they’re actually large, open-source networks that allow anyone to create applications to enable financial action to occur without the involvement of centralized institutions.
- There are an estimated 1.7 billion people who currently lack access to financial services.
- Although existing infrastructure has been instrumental in generating wealth, very little has ended up going to this excluded population.
Decentralization means that there isn’t a single point of failure, since records are kept across thousands of databases through a peer-to-peer network. It’s permissionless, open to anyone — irrespective of economic status or location and, one of the most important advantages, blockchains are censorship resistant.
The allure of DeFi comes directly from its decentralized applications, also called DApps, due to the lower cost that these plug-and-play apps grants their users with just a smartphone.
Why is the world embracing DeFi?
The biggest reason the financial services industry is as overstuffed as it is today is due to the overall lack of security for digital financial transactions. Since there was no way of trusting digital counterparties, we have had to pay fees to financial institutions in charge of policing, and therefore, enforcing that trust.
But with Blockchain, the principles that create ‘digital trust’ seen on Bitcoin, and Ethereum’s smart contracts, are within reach of most of the currently unbanked population.
These principles are actually self-executing pieces of code that execute business logic after some predefined conditions are met.
They enforce financial contracts -in that they escrow funds and transfer them around in response to certain events- in an automated and encrypted way which ensures that the encoded business logic can’t be manipulated by a central party once its deployed to its respective mainnet.
As of January 2019, 57% of the world’s population now uses the internet on a regular basis. Recent research from the World Bank suggests that two-thirds of unbanked citizens now own a mobile device.
DeFi has the potential to:
- Transform the lives of the world’s unbanked.
- And make life more affordable for everyone else.
Which are its biggest pain points?
Like we said above, you have unrestricted access to banking systems, transactional security, transparency and censorship resistance but, let’s take a look at:
Remittances market: Foreign workers send billions of dollars across borders to their families every year. The fees they face are often enormous — eating away their modest income. DeFi services have the potential to reduce their fees and the transactional cost at institutional level by more than 50%.
Loans: It can be near impossible for the unbanked to borrow money, due to lacking credit records and history with a banking institution. DeFi platforms have the potential to connect borrowers and lenders directly, eliminating credit checks, and enable digital assets to be collateralized.
All of these advantages offer:
- An incentive for individuals to earn more and be more productive.
- Also help support economies on any side of the world.
What does this mean for the future?
Technology is more affordable, public blockchains are also beginning to become more sophisticated, and inventive DApps are being unveiled all the time. But, even if a higher proportion of the population have access to the tools needed to benefit from DeFi, there certainly are challenges that lie ahead for its proliferation.
Regardless of its potential, adoption in the crypto world has been modest to say the least since most project have failed to gain public awareness. This is mainly due to:
- Scalability concerns, which have been a long-running thorn in the side of most blockchain-based ecosystems.
- Public blockchains lacking the capacity to accommodate its userbase demands.
- Volatility due to speculative nature of cryptocurrencies sustaining their networks.
Then, how can Decentralized Finances become a market where investors can develop and grow?
Establishing contacts within DeFi platforms, considering partnerships, and engaging in conversations with decision-makers who can help this technology reach the masses, is vital if you want to make any crypto and blockchain avenue a compelling alternative to your investment portfolio.
There are bright minds aggressively pushing the DeFi market forward.
One company in particular, seems to have it all. Konzortia Capital, a holding company for a FinTech consortium, is introducing a new asset class that mixes the liquidity of a publicly traded stock with the advantages of a private equity. A game-changer with its own:
- Venture capital.
- And banking ecosystem.
A vision that aims to redesign the financial world that everyone takes for granted.
The best part?
They’re still on their private sale phase, which means, they’re offering any visionary investor that has what it takes to recognize how big of an opportunity this is, to participate at the ground-floor with very special advantages and preferences.
For us, this is the single most promising DeFI investment avenue you could currently pursue.
The echoes of what Konzortia Capital is bringing to the table will be heard for years to come, and we assure you, you’ll want to be a part of this.
But don’t take our word for granted, see that button just below? Well, click on it and find out exactly what this new asset class is, along with every application conforming its ecosystem.
And don’t worry, you don’t need to thank us for bringing this to you. Although we know, you’ll want to do just that!