Why do we need DeFi? A beginner friendly writeup

Short for Decentralized Finance, some have heralded it as a new age of financial instruments. Others have called it a nothing-burger, perhaps destined to relative-obscurity in the history of failed-technology. And some have called it a ponzi-scheme, in much need of regulation and oversight. Which of those is it? The answer is kind of all of them unfortunately.

Is DeFi going to replace traditional banking and finance?

ABSOLUTELY NOT. Anyone who tells you otherwise is either scamming you, misinformed, or simply an idiot. There is no world in which DeFi poses any significant threat to our current financial institutions. Bank of America, or the Bank of China, or BNB Paribas is not going to go belly-up because of Cryptocurrency or DeFi. However, that doesn’t mean that DeFi isn’t useful, or doesn’t have a future. The two can co-exist. Banks are concerned about DeFi, but in a way that eats away at their margins, not one that takes the whole pie.

It is estimated that there is currently around $100 Billion currently locked in DeFi, so regardless of what you think, it’s clearly not going anywhere anytime soon.

Cryptocurrency is all about trust. Everything you do in your life is a question of trust. When you drive down the road, you trust other drivers not to crash. You trust your car to work, and to not run off the road. You trust your insurance company to pay out the amount specified in your policy when you’re in an accident. The caveat in all of this is that it relies on trusting other-people. You trust people you don’t know to act properly, to do make good products, to do their job, and to give you the money you deserve. A world of Cryptocurrency means replacing that trust in people, with trust in code. It means removing the element of trust from the equation, and instead recognizing that you are in control of your own money.

The full article can be read here. Check it out!

https://thecryptoconundrum.net/dapps/defi.html