It is no news that ever since the world has been initiated to the domain of cryptocurrencies, the face of finance has changed drastically. The ways in which human beings interact with each other and engage in the exchange of products has evolved over the years. From the barter system to decentralized finance, it has been quite a journey. Until a few years ago, it would seem like fiat currency is the only way to purchase products and make investments. However, we were proved wrong with the creation of Bitcoin and the domain of finance changed forever since that. Today, we can sit right at home and access the money market without having to deal with any intermediaries.
Cryptocurrencies today have equal importance and relevance, if not more, as fiat currency and people from every walk of life have started showing more interest in investing in these little digital currencies. In fact, the interest in the crypto market has grown to such an extent that the total crypto market cap has gone over $2 TN and continues to hit new benchmarks as we speak of it. Decentralized Finance or DeFi, the moot point of this article, holds about $42 BN USD. As the domain of cryptocurrencies keep pushing its limits and venture into unexplored waters, mass adoption of Defi shall soon materialize into reality and penetrate every sector of our lives. This shall become a global phenomenon because of a few things that we are all set to discuss over the following few sections of the article.
A Quick Look at DeFi:
In this section of the article, we shall try to understand what DeFi translates into and have a quick look at its features before we go on to analyze the same in greater depths and details.
DeFi or Decentralized Finance is fueled by blockchain technology. It is the kind of finance that does not depend on intermediaries like banks, financial institutions and exchanges to provide any type of financial aids or services to people. DeFi allows you to explore various kinds of financial services and products like Smart Contracts without any interference from any third party. This is perhaps one of the greatest features of DeFi. As mentioned earlier, DeFi has a total market value of about $42 BN and is still growing at exceptional speeds. The space has also been instrumental in helping people lend, borrow and trade, and not just with cryptocurrencies but also with fiat assets as well.
There are a few tenets of DeFi that we need to round up at this point before we can see how it has been bringing in changes to the world of finance. The main tenets that define DeFi are as follows—
- It requires no permission from any authority or governing bodies.
- It is entirely censorship-resistant.
- Defi is final, precise and fluid.
- Finally, it is programmable to suit various financial needs of people.
These are some of the features that make DeFi so lucrative and serve as the reasons behind the gradual mass adoption of DeFi by the entire planet. Now that we have seen the features of DeFi, let us look at how DeFi is defining the world of payments and finance all around the globe.
What is Next in this Space?
Just as you could use several cash forecasting platforms to understand the financial needs of your project or business, DeFi shall help you fuel your projects and scale your business in a way that was never done before. It is also the main reason behind more people showing interest in resorting to cryptocurrencies. It is expected that in a few years, DeFi shall enable people to handle their finances via blockchain-enabled DeFi apps.
There shall be an integration between various FinTech players and native crypto projects, and once this is done, stablecoins and remittance systems shall become key players in enabling long-distance payments. Large firms shall also jump on the bandwagon and help clients be a part of the DeFi ecosystem and act as intermediaries between traditional banking and the financial system. Plus, DeFi shall also lead to effective and affordable insurance plans, and millennials shall start looking for ways to grow their interest with the help of DeFi.
From the discussion that ensued, it looks like a mass adoption of DeFi is underway and for good reasons. DeFi has been helping in building a robust space for decentralized finance and changing the way we look at finances. It shall not be long before people from every corner of the world become a part of the DeFi ecosystem and explore new ways of dealing with their finances and payments. The world is gradually adopting cryptocurrencies as its primary form of finance, and DeFi is just acting as a catalyst in making that happen.