Because prices are expected to rise in the future, inflation might diminish the value of your investments over time. This is especially evident when dealing with money. If you keep $10,000, it may not be enough to buy as much in 20 years. While you haven't really lost money, inflation has affected your purchasing power, resulting in a lower net worth. The average bank interest rate for interest checking accounts in the United States is 0.03%. Meanwhile, the average savings account rate is currently 0.06%, and the average money market account interest rate is 0.09%. (Source). Meanwhile consumer prices have an inflation rate of 4.2% (Source) So you might be thinking that your money is doing okay in the bank but in reality your savings aren’t growing fast enough to compete with inflation.
With banks not giving out any solution for inflation; decentralized finance has opened up a solution to it by removing the middleman. Through defi anyone can lend their savings directly to others and can earn back all of the interest for themselves. The key technologies that allow decentralized finance are blockchain and cryptocurrencies.
What are your thoughts on this? Is decentralization the future?