I was at a training event a few years ago and I suggested the idea of a digital peer-to-peer lending concept. The concept was met with great criticism, much to my surprise. People laughed at the idea. I remember one gentleman stating that it was the most absurd thing he has ever heard.
Fast forward a few years later and we are being introduced to the concept of DeFi. What is DeFi? DeFi is short for decentralized finance. It’s a decentralized financial services mechanism held on public blockchains. It’s primarily on Ethereum.
DeFi is revolutionizing finance. You can compete with banks and other financial institutions by borrowing, lending, earning interest, buying insurance, trading assets, trading derivatives, yield farming, etc. The means to do this is through cryptocurrency. DeFi is a peer-to-peer system and you remove the third-party completely from the mix, and you are able to remove all centralized financial institutions from the equation.
Bitcoin was revolutionary because it provided the concept of digital money. Michael Saylor the CEO of MicroStrategy calls Bitcoin hope. Why does Bitcoin provide hope? It provides hope because it gives everyone person on the globe the ability to access money. Bitcoin could very well usher in the greatest reallocation of wealth in the 21 century and beyond.
DeFi expands the theory further though. DeFi creates an alternative to banking, to Wall Street, to Insurance, and to so much more. DeFi creates options for more freedom with your money. DeFi revolutionizes finance.
DeFi currently runs on the Ethereum blockchain. People are using with DeFi to do lending, borrowing, trading, saving, buying derivatives and so much more.
I use to sell Insurance. It’s an interesting business. Insurance companies underwrite clients based on risk. The riskier you are, the more they won’t want to issue an insurance policy. I’m not saying insurance companies are bad. I’m just speaking from experience. I actually think insurance is a very good thing and would encourage people to use it. The problem is the company always wins. Everything they do has a profit. That’s not all bad but what if someone is “is not insurable”? Do they not deserve insurance? DeFi possibly solves that problem. With peer-to-peer insurance, it offers an alternative for everyone to be insured.
DeFi challenges every aspect of centralized finance. It takes the power out of central hands and gives more freedom to individuals over corporations. DeFi is revolutionary. I shudder to think where it will be in 10 to 50 years from now. Now is the time to take Bitcoin, cryptocurrency, and DeFi seriously. If Bitcoin is hope I think DeFi offers faith in a decentralized system.
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