DeFi: Decentralised Finance’s impact on 2020 and beyond

As inflation around the world quickly catches up to and threatens to overtake interest rates set by the major banks, it’s possible that soon keeping money in a misnomer “savings account” will actually lose us money.

What are people doing to combat this?

They’re looking elsewhere, squarely at the Decentralised Finance movement and the options it brings to them.

“Buy more money with your money”

7 Sept. 2020  \\ Finance                      Author: Alexander Boast

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What is DeFi?

Decentralised Finance is the guiding principle behind the blockchain initiative – something you’ve likely heard of by now – and the governing force behind the rise of cryptocurrencies such as Bitcoin and Ethereum.

Ethereum’s blockchain has enabled developers around the world – and even those with no technical skills – to create their own currencies, and build apps that solve real world problems with them. Whilst there are few notable examples of these so far, the industry as a whole is rapidly evolving.

Why is it relevant (to me)?

Well, how is money relevant to you? 

Decentralised Finance aims to shift the balance of financial power from the established banking system into the hands of people like you and me, and it’s making great inroads into doing it. Currently, cryptocurrencies offer a far more volatile rate of potential growth than traditional investment, but wonderful things called Stablecoins (that is, cryptocurrencies that aim to stay at a particular financial value) are able to offer the average person far better interest rates than highstreet banks.


How can I get involved? 

Ironically, there are two types of cryptocurrency exchanges from which you can begin your journey into DeFi:

Centralised exchanges – these, such as Coinbase, make it very simple to download and register on an app that is governed by financial institutions, offering an improved level of security and protection (and therefore confidence) but not really working in the DeFi movement’s favour.

Decentralised exchanges – true to their morals, these exchanges allow for the transfer of goods and services that are governed by other users rather than any central, for-profit business, and typically do not charge a commission or fee, or a much smaller one if they do. Many DeFi DApps (decentralised apps) will look to establish their own decentralised exchanges, and struggle with scalability and volatility as a result of being smaller and less known. 

What should we expect from the future? 

Over time, we should expect decentralised exchanges and apps to become more mainstream, affording us more control over our money. 

We should expect to actively own cryptocurrencies and exchange and convert them with our friends, and, perhaps most importantly, we should expect new solutions to old problems, new problems for old solutions, and new solutions to new problems. 

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