DeFi vs the banking system

The answer to this question is not simple, because it concerns the future, and the future contains a lot of unknowns. DeFi as a financial system is immune to state regulations because it has a global reach - the introduction of bans in one country does not preclude further action in others, and it is difficult to imagine a situation where all governments unanimously introduce regulations unfavorable to DeFi. Thus, the chance of the system being destroyed is minimal. No government will be able to block funds even on a single wallet because users have their funds under their control at all times. This is the opposite of the situation existing in the traditional banking system, where one decision is enough for the client to lose access to his account and the funds accumulated on it for days, months or even forever. So I don't think there is anything to worry about.

For me personally, the biggest advantage of DeFi is the high degree of anonymity compared to the traditional banking system. A group of people who, just like me, do not like the increasing surveillance penetrating, among others, to the financial system is constantly growing. Under the guise of security or protection against the effects of risky decisions, we have more and more examples of regulations interfering with financial management by individuals. It is enough to mention the need to explain the origin of larger transfers to a bank account or to close the accounts of persons or companies suspected of involvement in the crime without prior notice. DeFi offers much greater anonymity and thus attracts those who wish to keep at least some property out of regulators' reach. Unlike a bank account, the wallet itself is anonymous - at least until the funds are transferred to an exchange that knows our data thanks to KYC verification. I believe that it is not good for outsiders to decide if and how people can manage their funds, and unfortunately in many countries regulators strive to do so through constant changes to the law. Thanks to DeFi, the possibility of using financial services outside the banking system appeared for the first time.

I see no one has mentioned yet that access to financial services in the world is very uneven. First world countries have no problem with this, but in Africa, and in fragile and less developed countries, people live practically outside the financial system. It is hard to expect that they will decide to use a bank account many kilometers away from their place of residence (especially a paid account) or in a country that has repeatedly failed its citizens in terms of security or the rule of law. For such people, banking available through DeFi applications may be the only chance to store and multiply their funds, thus reducing economic exclusion. Thanks to stablecoins, they do not risk losing money due to exchange rate fluctuations, and at the same time protect their assets against inflation, e.g. through deposits offering higher interest rates than the vast majority of banks. For this reason, an increasing percentage of people in poor countries are joining DeFi - this is the only real alternative for them.

It is worth remembering that DeFi is built on a public blockchain using smart contracts (e.g. ethereum), i.e. special computer programs created to ensure compliance with the rules by system participants. This ensures a high level of security for operations and encourages new participants to join. In banks, we must rely on the belief that our funds are safe, procedures are followed, and in the event of problems, the money will be returned to us. At Defi, we do not lose control over them by entrusting them to intermediaries, because we manage the portfolio ourselves. We can send them to a different address, make purchases or sell them on decentralized exchanges. The offer of available products is growing and includes not only loans and deposits with interest rates more favorable than those offered by banks, but also includes more advanced financial instruments that allow you to multiply your savings or earn money on loans. Probably in the future there will be so many of them that they will become real competition for investment funds, Wall Street or bookmakers.

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I agree with everything written above. I would also like to add that the next few years will show in which direction everything is heading, but changes in the law in individual countries are practically certain. It is enough to look at the confusion that cryptocurrencies have caused in the last 4-5 years (for example: constant changes in the law in China, which ultimately led to the escape of miners and cryptocurrency exchanges from this country, or the indecisiveness of Russia or India regarding the right to own and trade cryptocurrencies by their citizens) to see that everything is moving towards regulating this market, not banning it. Governments have already realized that such a ban would be ineffective, and countries that have experimented with it are starting to roll back. I have no doubt that banks would love to do that, but in the age of the internet, that's not possible. The adoption phase of new blockchain-based technologies is currently underway and everyone needs time to adapt to the situation. If Chinese citizens are able to circumvent restrictive bans, the inhabitants of Western countries are even more so.

"Learn blockchan technology, otherwise you will be unemployed in a few years" - such a message - addressed to employees, CEOs or bank owners - I heard from the mouth of "blockchan technology evangelists" a few years ago, before the "era of DeFi projects". How successful has it been so far? In my (modest) opinion, DeFi will gain momentum if it is able to integrate more with reality (including the economy) - it will become more useful in the "real world", not only in the world of blockchain assets (the snuffbox is supposed to be for the nose, not snuffbox nose). As of today, I have not heard of such cases as: • Kowalski has a good business idea (building a factory, ice cream production, service facility, ...), but he does not have his own funds - so he uses DeFi and takes out an investment loan • A young couple wants to live in his own apartment - he uses DeFi, so he takes out a mortgage • Mr. Piotr builds his business as a portal project by issuing his tokens - he covers operating costs from a loan taken out in the DeFi system at the start