By babatu selector
Last updated: 2021-09-23T12:50:45+0000
Candlestick trade on cryptocurrency.
The current world economic system has left many 'wanting for more. Countries have seen economic upticks and downturns. A 2019 report by world vision has revealed that 689 million people in the world live in poverty.
The 2008 economic crisis could precipitate the current situation; The government was responsible for these actions.
Duly elected government officials and dictators have been making decisions that affect all humankind because each political policy or decision affects the economy. In a standard economy, the government can decide to:
Print more paper money (which undervalues savings of the citizens)
Increase taxation for the middle-class to get more revenue
Lower corporate taxes in a bid to create more jobs
Increase the interest rate to deter borrowing and halt inflation
Reduce interest rate to favour whoever suits the state
In most cases, the populace is not part of the decision-making. It has led individuals to sort for alternative means of proffering economic solutions.
The possible answer was bitcoin and cryptocurrency.
The idea behind cryptocurrency and bitcoin was to create an economical solution that takes power away from a few middlemen and give it back to the people ( in essence, it removes the middlemen in its entirety).
Clacified has a detailed article on how Satoshi Nakamoto created bitcoin and how the blockchain system works.
The creation of bitcoin as a digital currency may serve as a source of alternate economic power to the world. Still, it fails to offer more products readily available in a traditional economy.
The traditional world economy offers eligible individuals loans, insurance, portfolio management, and trading; bitcoin lacked in most of these services - the new role of Decentralized finance or DeFi.
A 2017 report by Globalfindex has shown that over 1.7 billion adults do not have access to banking institutions even mobile money. The same report claims that the number was about 2 billion in 2014.
This disparity is one of the many solutions that decentralized finance wants to solve. With decentralized finance, anyone from around the globe and can log online and access financial services.
DeFi seeks to offer limitless possibilities in the area of finance. It aims to act as a broker between the ordinary person and accessibility to financial tools.
Users can use Defi to get cryptocurrency loans, insurance services and even exchange one cryptocurrency for another.
At the end of this article, readers would understand:
The basic concept and definition of DeFi
The services and applications of DeFi
The effect of DeFi in the cryptocurrency and economic ecosystem. By babatu selector