Published in El Pais, 13 October 2021.
Currently the world has a banking problem as 31% of the world’s population does not have access to basic banking. Many have tried to solve this, but the solution is already out there with Decentralized Finance (DeFi), something that one day will shake the banks of the world.
There are many definitions of DeFi but essentially it is many people pooling their resources which others can borrow from, with the lenders receiving all the interest paid out without a central finance institution, like a bank, to take a substantial cut from it. To manage this, DeFi utilizing smart contracts in blockchains to keep track of who owns what and who borrows what and usually some collateral is put up to ensure repayment, eliminating the need to trust strangers to honour their commitment.
Right now, there is a lot of work to do for DeFi to become more mainstream. In its current incarnation DeFi is only available to those in the crypto industry as users can deposit their crypto and earn interest while others can borrow it if they have enough of their own cryptocurrency put up as collateral. Essentially it allows people to leverage their currency without having to sell it. Not in crypto? Then right now DeFi is not for you.
This should not be discouraging however as it is only in the early stages, and it has so much potential. Maybe one day I will be able to deposit money into it and someone from Bolivia will be able to borrow it.
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