The mainstream financial system has failed us time and time again; from the Dot Com Bubble to the devastating Subprime Mortgage Crisis. This is unsurprising given that the system was designed specifically to move at the whims of the upper echelons of the trading community whose movements (or lack thereof) ultimately decide the fate of smaller traders seeking a slice of the cake. Indeed, checks and balances have been put in place to cushion the impact of the financial systems violent swings, yet we have seen from numerous financial crises that these are not enough. Humans are not, after all, infallible.
Blockchain and cryptocurrencies such as Bitcoin, which experienced their zenith between 2017 and 2018, provided the promise of a new way of approaching money and conducting transactions with greater transparency and immutability. Nonetheless, crypto, despite being promising, also fell victim to the same failings faced by Wall Street – the very institution it promised to disrupt.
In 2020, a new concept has emerged, one that claims to combine mainstream financial services with the immutability of blockchain topped with machine-learning data that provides objectivity when conducting all manner of transactions, particularly trading. Decentralized finance, also known as DeFi, aims to democratize the financial market without the rabidly speculative nature that haunted the 2018 ICO markets. Through the use of AI, big data, and smart contracts, firms in the DeFi sector are reviving the vision of crypto pioneers who wanted to see a change in the way our financial systems work.
2017 with a twist?
As with all new concepts, enthusiasm runs high when a new idea is first introduced, especially when they claim to shake the status quo. This was what led to the ICO boom in 2017 and 2018 when cryptocurrencies became the non-conformist buzz word for challenging the inefficiencies that exist in the modern financial system. During this time, startup projects in crypto sprouted like grass for all manner of uses from peer-to-peer lending to raising virtual pets – all of which were catapulted by the intriguing value proposition provided by the crypto community at the time: the possibility of profiting from investments without the limitations set by inter ...