Will "De-Fi" replace traditional banking in the future?

[xiboothrezi]

DeFi aims to be an alternative not the main one when it comes to finance system.  I do think it will become popular one day but it will never replace the banking system.  Before assuming anything, we have to see DeFi first to be established and prove itself that it is not an exploitable system without being centralized.  Aside from that I believe it will be strongly opposed by the centralized authority because it goes against their own central authority.  The best contribution of DeFi is their effect on the shaping of future finance system but it will never replace traditional banking system.

Most governments will definitely limit this, moreover, DeFi is not something the government can fully control. As you said, this will only be an alternative, not a substitute. Although the system is better, there are some people who doubt it because it is mostly anonymous, so they think it is less secure.
And trust in a system of burdens with government oversight is considered safer. Well, this is just a matter of taste, the important thing is we can use it wisely and take advantage of it as possible.

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[Abiky]

Most governments will definitely limit this, moreover, DeFi is not something the government can fully control. As you said, this will only be an alternative, not a substitute. Although the system is better, there are some people who doubt it because it is mostly anonymous, so they think it is less secure.
And trust in a system of burdens with government oversight is considered safer. Well, this is just a matter of taste, the important thing is we can use it wisely and take advantage of it as possible.

That's certainly true, mate. The fact that "De-Fi" has no middleman and it's anonymous, scares away many people in the mainstream world. After all, the average person is looking for something that's backed by a trusted entity. It's this reason why "De-Fi" won't be able to replace traditional banks anytime soon. At least, the industry will find it's own way among the unbanked people using crypto in the mainstream world. You can leverage the benefits of both banks and "De-Fi" in order to maintain a steady financial life for years to come. I believe that "De-Fi" will prove to be a nice alternative to banks in times of need. With attractive interest rates available on "De-Fi" platforms, who can't resist spending money on them?

As long as "De-Fi's" legitimate use cases are expanded in the mainstream world, the industry will be here to stay for many generations. In their early days, expect a lot of hype and scams going all over the place. But wait a few more years, and you'll see a mature industry that's supported by institutional investors and serious traders alike. Ultimately, banks will prevail as they dominate the world's economy. And there may be nothing we can do to stop them. At least, crypto/Blockchain tech will be here to stay for many generations. Just my opinion

[ZEIIMAN]

We should not overlook the banks from the accounts prematurely. The market for decentralized Finance only looks so simple, clear and accessible. Let's dig deeper and see what's wrong with DeFi.
The main problem is the security of providing loans. As mentioned above, hundreds of new DeFi tokens appear on the market every day, which disappear just as quickly. Here, for example, is the Yam token, which lasted less than a day, and investors have already managed to buy a dummy coin. If you look at the root of the problem, more than half of the DeFi tokens will leave the market before the end of the year. And in the next five years, there will be less than a dozen truly worthwhile coins. By investing in DeFi tokens today, you run the risk of running into dummy coins and losing your savings.

[gwdf1]

I doubt that it can substitute banking (traditional). The number of people that now work with cryptocurrencies and even live for crypto is huge (millions of them). But it cannot be compared with billions of the rest guys, which are so far of these things that it seems they will never use anything of this sort. Banks for them are the best decision.

[CryptoTrip]

Everything that cant be controlled by the state is a threat to it, therefore, with the strong development of defi and the pushing back of the centralized banking system, the government will try to suppress this development by any means, laws will be created prohibiting the use of cryptocurrencies and similar measures. Therefore, the scaling of cryptocurrency and defi is inevitable, but I see use as a daily national currency only in countries with hyperinflation.

[Abiky]

Everything that cant be controlled by the state is a threat to it, therefore, with the strong development of defi and the pushing back of the centralized banking system, the government will try to suppress this development by any means, laws will be created prohibiting the use of cryptocurrencies and similar measures. Therefore, the scaling of cryptocurrency and defi is inevitable, but I see use as a daily national currency only in countries with hyperinflation.

Sadly, this will turn out to be the fate of "De-Fi" and crypto in general. Governments will eventually restrict the use of crypto, as it becomes a threat to the existing monetary system. The average individual will be forced to use traditional banks, as crypto will be deemed illegal. Still, it'll be possible to use crypto "under the radar". "De-Fi" provides many services offered by mainstream banks to the unbanked person. Behind the scenes, the crypto economy will flow as usual regardless of government restrictions worldwide. Since Fiat on/off ramps will no longer exist, people willing to get access to "De-Fi" will have to acquire cryptocurrencies "under the table". The only way to achieve this would be via P2P trading platforms or by performing an in-person exchange from Fiat to crypto or vice versa.

As far as "De-Fi" replacing mainstream banks go, I don't think they'll be able to do it is as long as governments and central banks dominate the economy. They're still too powerful to take down anytime soon. Despite Blockchain tech's recent advancements, Banks are still relevant financial institutions in the mainstream world. My guess is that Banks will adopt Blockchain technology to use it for their own benefit. I'd imagine they'd create "De-Fi" platforms of their own that are utterly centralized (becoming "Ce-Fi" as we speak). Banks have nothing to lose by creating a system they can easily manipulate and control to their hearts' content. Truly decentralized finance platforms will survive in the long run, but they'll remain as an alternative than a replacement to Banks. As long as "De-Fi" works as intended, there should be nothing to worry about. Let's focus on helping make Blockchain a better place instead of focusing on replacing banks altogether. Just my opinion

[Argoo]

DeFi projects can distract some of the clients of traditional banks.  However, banks are still not going anywhere, since they perform many other useful functions and, most importantly, they are supported by the state.  And a significant part of citizens will traditionally trust more state banks, which are protected by the state.  DeFi projects take a lot of work and time to gain the trust of citizens.

[WalkerIVIV]

There is no point in going too far with the Defi project.  I have been noticing for some time now that most of the projects excep one or two are fake.  The final moments of these projects are coming very soon.

The scam defi will disappear but the legit defi has a lot of potential to replace the traditional economic system. As fa as i can see if people can get flash loan and they can also get interest from their money that already locked in the defi platform. You can't even get a lot of interest when you are putting your money into the bank or something else.


Defi gives very good interest based on the % of loan interest.

[Vaculin]

There is no point in going too far with the Defi project.  I have been noticing for some time now that most of the projects excep one or two are fake.  The final moments of these projects are coming very soon.

The scam defi will disappear but the legit defi has a lot of potential to replace the traditional economic system. As fa as i can see if people can get flash loan and they can also get interest from their money that already locked in the defi platform. You can't even get a lot of interest when you are putting your money into the bank or something else.


Defi gives very good interest based on the % of loan interest.

You don't invest on bank, you just put your money for safekeeping and you'll earn a little interest, that's different from investing in a DeFi projects where the risk is high, so the reward is also high. Banking system will continue to dominate, traditional banking as its name because people get used to it, so I don't think De-Fi will replace that traditional banking when even 1/4 of the total population does not even know crypto.

[Abiky]

I do not think. Banks operate with stable money, albeit fiat (I'm talking about the dollar), while the DeFi sector is volatile like all other cryptocurrencies.
This will not work for most people, because in the case of hesitation, they can simply be left without a livelihood.

Good point. "De-Fi" could never replace mainstream banks if they rely on volatile cryptocurrencies to survive. Still, stablecoins provide the goodness of Fiat into the crypto/Blockchain space. But it's not enough to rival banks' prominence in the mainstream world, as they're too big to fail. As long as governments rely on central banks for the issuance of Fiat currencies around the world, "De-Fi" will only remain as an alternative than a replacement. At least, the unbanked people will be able to enjoy all of the benefits of mainstream banks without the need to verify their identities. You and only you are the sole owner of your funds in "De-Fi". That's the beauty of crypto/Blockchain tech. If Bitcoin didn't came into existence 11 years ago, none of this would've been possible.

Nonetheless, time will tell us if "De-Fi" platforms will be here to stay. As long as developers, and individuals collaborate on making "De-Fi" a better place, there should be nothing to worry about. With the ever-rising number of "De-Fi" platforms providing lending/borrowing services to crypto users, it seems to me that the industry will last for long. The hype will end for sure, paving the way for truly-legitimate "De-Fi" projects in the crypto/Blockchain space. Who knows? Maybe "De-Fi" will be able to live alongside mainstream banks in the future? Just my opinion

[2double0]

Many 'DeFi' tokens have been released and gone because users have known the risks and were liquidated in keeping positions in these tokens whether marginal, futures or spot. I don't agree with OP and think that DeFi will not replace anything, but will get replaced by something new like ICOs and IEOs got replaced by DeFi trend.

[cryptoknightt]

I don't think so because they will just take the concept, like digital fiat money that has started to take effect in several countries around the world. but who knows, maybe crypto will become big and be used later in the future. if that's the case then defi will take over.

[7788bitcoin]

There is no point in going too far with the Defi project.  I have been noticing for some time now that most of the projects excep one or two are fake.  The final moments of these projects are coming very soon.

For most it is true as it is basically a pump and dump scheme for most projects and now everyone is renaming their project as Defi projects as they know it has become a catchy name to attract the investors and many of the dead ICO projects are renaming their project name and adding Defi and relaunching them again and i have seen a few projects like that.

Defi nor cryptocurrency market is replacing traditional banking .

[Temido2222]

I highly doubt there will be a future where the average person will directly interact with Defi, people are scared of new things and many will like to see a human face when signing up for a 20 year mortgage or business loan. Not to mention that people like banks because banks offer stability

[bittick]

Doubt. De-Fi even as of now already fading out its hype, replacing traditional banking is not an easy feat and even thjere's numerous attempt of highly innovative platform trying to replace our traditional banking and most of them fail.
People already used to how the bank works and most of them aren't really welcoming to new things as it's involving their money.

Bank also still frequently used to buy or sell crypto and that alone already make it relevant enough to keep existing for centuries despite crypto rapid growth.

[fia_naila]

I am not saying it will replace banking, but still there is a chance, because banking system is so fake. In my country there is person who put 2million dollar in his account and suddenly its dissappear because the fund is stollen by bankers. And when that things happen you will not get your fund fast. It will going through lawsuit or something. Takes time to get your fund.

[Temido2222]

I am not saying it will replace banking, but still there is a chance, because banking system is so fake. In my country there is person who put 2million dollar in his account and suddenly its dissappear because the fund is stollen by bankers. And when that things happen you will not get your fund fast. It will going through lawsuit or something. Takes time to get your fund.

That's a problem with corruption, there's no guarantee that Defi can or will solve that. How many of these ICOs and new tokens will rugpull in the coming weeks/months?

[lionheart78]

I am not saying it will replace banking, but still there is a chance, because banking system is so fake. In my country there is person who put 2million dollar in his account and suddenly its dissappear because the fund is stollen by bankers. And when that things happen you will not get your fund fast. It will going through lawsuit or something. Takes time to get your fund.

How sure are you that all De-Fi are not?  I really like the idea of De-Fi, but the problem is that, it can be easily exploit by the founder himself , if his intention in creating it is ill.  Let us be in reality here, De-Fi as far as I know is created to be an alternative for banking and not to replace it.  Aside from that, authorities will never allow such uncontrolled system to replace the one they have a full grasp.

[lienfaye]

I am not saying it will replace banking, but still there is a chance, because banking system is so fake. In my country there is person who put 2million dollar in his account and suddenly its dissappear because the fund is stollen by bankers. And when that things happen you will not get your fund fast. It will going through lawsuit or something. Takes time to get your fund.

Thats the risk of storing your funds in bank. Such scenario is possible to happen and worse is you'll be having a hard time taking your money back and it might take a long period.

On the other side Defi (just like the uses of crypto) has a chance to take over but only to those who believe in this system. For people who used to bank this can be hard to grasp specially if they're not open for the new technology. Thus they might still chose the traditional way to store their assets.

[IkonaDro4ku]

I think that's all De-Fi in the future they cannot compete with banks as they simply have more power and are supported by governments. So I think that it will not get very much popularity only and banks moreover do not stand still.