Participating in traditional financial markets has become less attractive to consumers and institutional investors of late. New opportunities are plentiful, and decentralized finance (DeFi) receives a lot of attention. However, this new movement is not without its risks and flaws either.
For decades, consumers and institutional investors have explored the different options presented to them in the financial world. This approach has worked quite well, as one could even earn passive income in their savings account. Today, things look very different as many banks charge negative interest rates and continue to exploit their customers.
Another problem compounding the declining attractiveness of centralized finance is the continuing impediments in the industry. More specifically, banks are forced to settle lawsuits regularly, mainly due to their irregularities. This ranges from opening accounts for clients without their knowledge, masking products under different names while providing the same service, money laundering, etc.
Despite all this, many people remain loyal to their banks or other financial institutions. Or that used to be the case, since decentralized finance has a lot of interested people today. Unlike traditional finance, DeFi has no exorbitant fees, unfair terms, or financial exclusion. Instead, it is a movement that aims to bring financial services to everyone, regardless of their current access to these products.
Make DeFi more accessible
While it may seem that decentralized finance is destined to disrupt traditional finance, there is still a lot of work to be done. In its current state, DeFi primarily caters to users who have sufficient knowledge of the cryptocurrency market. Unfortunately, the cryptocurrency industry remains a niche market even today even though the prices of Bitcoin (BTC) and Ether (ETH) have risen rapidly in recent months.
In fact, there are no viable guides on how to prepare for these new financial opportunities. Every existing guide assumes that the reader already knows the ins and outs of cryptocurrency, which is generally not the case.
Education is the first big step
Delving into the complex nature of DeFi requires a clear and concise education. There is a growing need for educational platforms that address the investment levels of beginners. Publications providing educational content around DeFi have seen significant growth throughout 2020 and early 2021. Educational initiatives aim to lower barriers to entry to decentralized finance by educating people about cryptocurrency and cryptocurrency. opportunities offered by the industry in general. Ultimately, a good goal for DeFi would be for an additional 100 million people to have deposited at least a dollar each into decentralized finance by 2025. It may seem like an easy goal, but convincing millions of people to get involved in this industry is not easy. Many people remain unconvinced about cryptocurrencies in general, and they likely feel the same about DeFi.
We as an industry must recognize that things need to get better for the masses to take more seriously. Having a global impact with complex structures and technologies and requiring the use of cryptocurrencies guarantees a clear and concise education.
A great catalyst for launching more educational initiatives now is the recent saga r / Wallstreetbets and GameStop. Suddenly, people around the world found themselves in a position of power to make the financial market dance. It describes the need to make financial markets accessible to everyone, however today’s financial industry does not always allow this to happen. This became apparent when various vendors they stopped GameStop stock trading to protect the biggest investors. It serves as an excellent example of how unfair the financial industry can be.
Creating a level playing field
At its core, the financial sector can function without centralized gatekeepers or intermediaries. The DeFi sector has shown that this is possible, even though the industry is still in its early stages. Creating an environment where anyone can safely borrow, lend, and trade directly is possible, but education should come first.
As the public perception of traditional finance continues to receive blows on the chin, it is a matter of time before large groups begin to explore other horizons. Investing in cryptocurrencies has given many a taste of what financial freedom can mean. However, it is crucial to understand that this is only the first step on a long road to achieving that freedom.
DeFi is much more than owning Bitcoin, Ether, or any other crypto asset. While that certainly gives one access to decentralized finance, educational initiatives led by industry leaders will help explain how you can use these assets for more than just speculative purposes. Through education, research, and guidance, a new era of finance may be just around the corner.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, readers should do their own research when making a decision.
The views, thoughts and opinions expressed here belong solely to the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Piers Ridyard is the CEO of Radix, the decentralized finance protocol. Piers, a former Y Combinator student, joined Radix after leaving his previous company, which created DLT-based trading rooms for the clearing of syndicated insurance contracts.