Global Access to Financial ServicesWith DeFi, anyone with an internet connection and a smartphone can gain access to financial services. Due to its permissionless nature, users cannot be restricted geographically. So even when they block IP addresses, users can still access the network remotely via VPN. In contrast, most traditional financial services limit is geography. (e.g. a North Korean citizen would not be able to open a bank account in HK) Apart from geographic limitation, traditional financial services also favour the wealthier population. Clients with more assets typically enjoy better rates and have access to advanced wealth management tools. DeFi minimizes the inequality and users can enjoy similar services regardless of size.
Privacy and SecurityWith the surveillance of government agencies and large companies, the closely monitor our spending habits and financial statuses. Based on this data, merchants advertise products that “fit” our need and banks calculate a credit score that determines access to products such as loans. In the context of DeFi, they don’t require personal identity to enjoy the service. The system will provide services according to the status of your cryptocurrency wallet address. Apart from financial privacy, the use of smart contracts also minimise human error and improve efficiency. Using public blockchains like Ethereum, we can also benefit from the immutability and censorship-resistant nature of blockchain technology.
TLDRTraditional banks and Fintech companies are centralized. Bitcoin is a decentralised form of money DeFi is conventional financial services built on blockchain. The most notable advantages are censorship resistance, open-source and equal access to financial services. The 100+ Projects Pioneering Decentralized Finance, Consensys, 29 Mar 2019 https://media.consensys.net/the-100-projects-pioneering-decentralized-finance-717478ddcdf2 DeFi and Credit on the Blockchain: Why Loans Are Better When They’re Decentralized, Simon Chandler, Cointelegraph, 25 May 2019 https://cointelegraph.com/news/defi-and-credit-on-the-blockchain-why-loans-are-better-when-theyre-decentralized DeFi startup offers ETF analog allowing investors to trade on trends, The Block https://www.theblockcrypto.com/2019/07/15/defi-startup-offers-etf-analog-allowing-investors-to-trade-on-trends/ Written by Charlie Tsang Trader @Genesis Block For any queries please contact email@example.com
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