DeFi and the Unbanked
In 2021 there are over a billion people who are without access to banking infrastructure despite the constant introduction of new technologies. Whilst there are varying circumstances and situations that can explain why this is the case, there are very few solutions to the problem.
Cryptocurrency and blockchain technologies have proven one thing, that financial activity can take place outside of the legacy systems in place today. Banking, investing, loans, insurance and almost every other fiscal interaction can now take place in the ever-evolving expanse of digital currencies.
Decentralised Finance (DeFi) is a term that encompasses all the products, platforms, and applications that are built on blockchain technologies, through which users and entities of any size can conduct transactions. Typically, people rely upon centralised systems to conduct financial activity, meaning that a single source gets to decide whether or not you’re allowed to access their platforms; and even when you already are verified, they can still ‘restrict’ your account if they wish, or decide whether if you qualify for a loan and so on.
Banking on Blockchain
There are many who exist in countries that have relatively strong economies that are unable to access banking platforms, and this can be due to a myriad of reasons. In places like China and India, some people who live in rural areas simply do not have banks or they lack the official identification and credentials to open up an account.
Venezuela is a nation caught in the grips of hyperinflation and political corruption where financial institutions are no longer trusted. Bitcoin, stablecoins, and DeFi applications are being adopted nationwide as a means of circumventing the economic downfall caused by central authorities.
DeFi represents one of the fastest-growing sectors of blockchain technology that could be transformative for billions of people. This sector is a reinterpretation or extension of modern financial services that change how we interact with money, and if this is a view of the world beyond traditional finance then the future is looking extraordinarily bright.
Financial inclusion is a meaningful and positive phrase that best describes the end result of DeFi technologies around the world, whether or not you had banking to begin with.
Recently, the CoinBurp DeFi wallet launched bringing those benefits straight to you, with NFT compatibility and much more. To find out more, check out the dedicated blog post and be sure to download the app today.
Cryptocurrencies are generally not regulated and investors do not have access to recourse or compensation schemes such as, for example, in the UK, the Financial Ombudsman Service or the Financial Services Compensation Scheme. Investing in cryptocurrencies can be high risk and investors should carefully evaluate their appetite for risk and their understanding of trading cryptocurrencies prior to entering into a transaction.