Why is DeFi such a big deal? I've said that DeFi might be the single biggest force to hit crypto in years and I want to dive into some of the reasons I think that’s the case. So let's get started. What are the fantastic things that DeFi makes possible? Okay, for starters, anyone with an internet connection and a smartphone can now access valuable financial services. Financial services delivered across borders without interruption. Another wonderful aspect of DeFi is creating collateral out of the digital assets you own and to do that, the next step is being able to borrow against those assets. There really is no other way to do this but on a blockchain because only on a blockchain can everyone be certain that the digital asset you're pledging as collateral. Now that fact, the ability to near instantly invalidate asset is authentic is a powerful
part of the DeFi story. Remember, gold doesn’t self-identify. It doesn't say that everyone and say, “look at me, I’m gold and I'm good collateral.” How do you know if someone pledging a box of metal if giving you gold? Well you don’t unless you do a lot of work to test it and then safeguard it. DeFi digital assets don't have that issue and because these blockchain digital assets can be quickly and cheaply certified as authentic, you can get equity on those assets much faster than ever possible in the traditional finance world. A couple of other wonderful things of DeFi, all the collateral lending contracts you enter into are fully transparent. They’re fully transparent because they’re software code. Code that has been reviewed and scrutinized or written about in forms and blogs for everyone to see, nothing is hidden. Now compare that to modern banking. One other
aspect of DeFi I like is fact it's not dependent on tax payer insured banking deposits. This is not fractural reserved banking. There is no credit risk taxpayers are knowingly back stopping. That reason alone right there is reason to like what DeFi is doing. You might also like the fact that DeFi more fairly distributes to the gains of finance. You can play the role of banker, you can both borrow and lend and be treated fairly in the process. Lastly, what I really like about DeFi is that it’s serving the crypto community. It’s not preoccupied with trying to convince big existing companies to think about, to consider, maybe adopt blockchain technology. This is only the second time I’ve seen this happen. The crypto community has created something for itself. Now the first time was the stable coin, and by the way, this is how the consumer internet developed in the first five years after the mosaic browser. The internet community
looked inward at itself, at people who would have already joined the bandwagon serving, acquiring internet users and internet businesses. They didn't worry about old school retailers and newspapers and media companies that were sitting on the fence and it worked. The growth in DeFi is going to work the same way. Final thought here, what about the word decentralize in decentralize finance? I judge decentralize or decentralization based on one key principle: Would the systems still work if the original application builders went away, dissolved and the infrastructure they managed was turned off? Today I don't know of any DeFi applications that meet that standard but that is going to change. The way we create, trade and now collateralize digital assets on chain is going to dramatically improve next year, in 2020 and we've got a lot more to say about that particular subject, in the weeks ahead.
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