Decentralized finance is bringing finance to the unbanked, as well as fairness and transparency to the financial industry. DeFi takes power from dangerous centralized entities, such as governments and international corporations, which take advantage of citizens and consumers alike, and gives that power to the individual.
What adversities does decentralized finance solve?
The once public servants turned authorities, as well as shareholders in the .01 percent and beyond, hoard assets and technology, instead of allowing those who need it to create wealth for their families, and the generations that follow. Simultaneously, the people shoulder the added costs of an increasingly centrally managed economy.
For instance, interest rates on student debt are astronomical, for the government got into the student loan industry, guaranteeing the debt, and thus driving the price of education through the roof. Now, along with general inflation, the costs are financially paralyzing, and, indeed, have paralyzed many financially. Furthermore, students bear the load of considerable credit card debt, while going through school and trying to balance the finances out.
They receive hundreds of thousands of dollars in student loans, yet can’t get a $1,000 credit card loan to start a business or a mortgage. (Even if you have tens of thousands of dollars in cryptocurrency.) Some credit cards have 20 some odd percent interest rates. Personal loans have 18%, interest rates, etc.
You have to meet higher and higher qualifications to get even a small loan. Furthermore, announcements have been made that even the financial requirements won’t be enough to receive a loan, with institutions potentially looking at something akin to a social credit score.
The issues of centralized loans
The centralization of finance manipulates and damages livelihoods. All around the world, people lack access to basic banking services or are buried in depressing and absurd amounts of debt. It’s an untenable situation. In certain countries, people use their cell phone minutes as a currency. Clearly, there is a need for an asset that can be traded back and forth between the people so that they can have their own monetary system not dependent upon one central entity overseeing their lives.
When credit was available, people ended up going after car title loans and short term high interest loans in general. They then bury themselves in even more debt, maxing out credit cards that they can’t pay back, because our governments have been shutting down small business and placing limitations and restrictions, amid The Great Lockdown, which the IMF dubbed the government shutdowns across the world and known generally as the pandemic.
People are just not able to run a business for an income so they can put food on the tables of their families, and the overleveraged world is becoming even more overleveraged. The debt bubble is going to blow up. Due to the stimulus packages, people are not going back to work, thus creating increased inflation with the US dollar, which loses at least some of its power as a world reserve currency every day as we move to a more multi-polar reality.
Enter DeFi. DeFi is resistance finance. Its apps are the tools of a global revolution putting an end to the nightmare that is the traditional financial system. As we see more and more of these banks and institutions saying you can’t buy crypto on your credit card, which you pay back with your own money, that they are obsolete institutions becomes clearer. DeFi can offer lending, margin trading, insurance, and more all without middlemen, who could instead be replaced with trustless data driven oracles and smart contracts.
That’s the new system. There is a big movement behind it. It’s the direction we are as a species is going, and it emphasizes the individual in the western tradition. It’s time to create a financial system for the people built on a trustless and decentralized platform. It is time to challenge the traditional financial system. It is time for DeFi.
Author: RTR Crypto
RTR Crypto is the Global Project Manager for $FEGtoken. He worked as an ER nurse for seven years, as well as one year in hospice nursing, and also served on the Texas disaster response team. He followed his father’s footsteps and began investing in stocks, before becoming involved in crypto. His father lovingly told him he was an idiot. RTR left medical school in his third year to work on improved decentralized trading platforms and creating a safer crypto space for new and experienced investors alongside the FEG team.
Source: https://en.cryptonomist.ch/2022/05/01/potential-decentralized-finance-defi/