The battle of Banks vs DeFi

Traditional banking wishes to maintain the status quo, where it dominates finance. Nobel Prize winners like Muhammad Yunus and Joseph Stiglitz have warned us in the past that central banking has morphed to keep this status quo in check. Meanwhile, Mike Maloney, an expert on monetary history and economics called it, “the biggest scam in the history of mankind.”

Following the global financial crisis and the collapse of several banks, individuals and small business owners who simply want to keep the wealth they have earned are increasingly asking, “Is my bank working for me, or am I working for my bank?

In the past there was no alternative to your bank, or to central bank currencies, but then along came Bitcoin, followed by a string of alternatives. Today, with cryptocurrencies and decentralized finance (DeFi) platforms on the scene, institutional banks are no longer the only players in the game.

DeFi platforms are proliferating, even though they have only existed for a relatively brief time, and DeFi is showing off its advantages for retail investors who are unhappy with their bank. For example, when you deposit money in your bank you are effectively lending it to the bank. Most banks use fractional-reserve banking, which means if someone deposits $100, the bank can lend out $90 and only has to keep $10 of it on hand at any time. And what do you get in return from your bank? Nothing!

Furthermore, you can lose money. f you put $100,000 into a bank account at the start of the year, and United States dollar currency debasement is 10% for the year, then by the year’s end, your savings can buy 10% less than before.

DeFi gives you back control

Now look at DeFi platforms. You have complete control over your finances and can trade your assets. You can invest in assets that are a hedge against inflation, such as Bitcoin. Users can put their savings to work for them on DeFi lending platforms and trade digital assets such as NFTs. There are fewer locked-in contracts to use services, so that individuals can come and go as they please. There are no bank fees, although there may be gas fees for transactions, plus Individuals can open anonymous accounts to trade and store their wealth.

Overall, as DeFi grows and attracts more users, these platforms will put severe pressure on traditional banks, which will be struggling to morph into a service that customers really want. And when Web 3.0 arrives, we will no doubt see a surge in the DeFi ecosystem, which will become pivotal to being in the Metaverse.

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LendoChain is a DeFi platform offering a suite of crypto-related services https://www.lendochain.com

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LendoChain

LendoChain

LendoChain is a DeFi platform offering a suite of crypto-related services https://www.lendochain.com

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