Decentralized Finance vs Traditional Finance

[amishmanish]

Traditional Finance has wielded a lot of power over lives of people for a very long time. This is because Financial institutions decided the flow of money. Who gets the cheap loans? Who gets the backing and credibility and access? Money and Value is really about access and the power to influence. Banks have a hell lot of both.

Bitcoin, blockchain and crypto in general has enabled a lot of people to have a shot at wielding that power. The information barrier is not high and it does not ask for pedigree. You don't have to be a Harvard graduate to have your plans taken seriously. If you have the ability to take an honest idea and make it work using the blockchain technology, you can easily be the next big institution. Just look at all these DeFi projects with people locking funds in their custody.

The question is are we ready for it? Do you have the capacity to engage and build access??

[iTradeChips]

In my opinion, I think the people in finance should be able to see the worthiness or value of blockchain technology. Not just in cryptocurrency and finance but also the value of the technology in other sectors of industry and society in general. Of course not all of the traditional finance people would gladly embrace cryptocurrency with open arms but they should at least give it a chance to include it in their institutions and see how it works for them too. Of course the normal people would embrace cryptocurrency as some sort of "people's currency" and want nothing to do with big finance, but Bitcoin itself is already being noticed.

[Wahyuihib]

In managing finances, there has been a development from traditional trading in a positive direction through blockchain technology using the defi system. where the aim is to provide benefits to the community so that they can manage their finances without interference from other parties. and without us knowing we are already using it in our daily activities

[amishmanish]

--snip--
Of course not all of the traditional finance people would gladly embrace cryptocurrency with open arms but they should at least give it a chance to include it in their institutions and see how it works for them too.

If you look closely, most traditional finance is open to use blockchain as a technology but only for replacing things like notary services. They won't adopt public cryptocurrencies except as commodities. They are already doing it.

Of course the normal people would embrace cryptocurrency as some sort of "people's currency" and want nothing to do with big finance, but Bitcoin itself is already being noticed.

What is Big Finance in your opinion? Why would normal people won't want anything to do with it. If the recent example of the showdown between retailers and Hedge funds over GME is considered, I am pretty sure that people want to have everything to do with big finance.

Do your research.
--snip--

Bot..Bot..Go Away!!

[samcrypto]

Traditional and Decentralized have their own pros and cons and even if we say right now that traditional financing are sucks, we can't stop them from doing business but we can make a big change only if you improve your knowledge about the opportunities around you.

Not everyone wants to use Decentralized market simply because they are afraid to take risk, and that's their choice so we have to respect it. There's nothing to worry about having a financial account now since decentralized market enables people from opening an account without requiring any documents, now its up to Traditional Financing if they are going to adopt blockchain technology or not.

[SirLancelot]

The question is are we ready for it? Do you have the capacity to engage and build access??

The good thing about bitcoin and crypto is that we are in a world that money doesn't care about who you are. Whatever your race is, your religion, your gender, your nationality basically nothing about you matters, in real world if you are a very rich hedge fund kid with millions of dollars to play, you get backing from big names and you do whatever you want to do and you could lose tens of millions and still be bailed out by your father's business friends, that is how it works.

However in this world you could be Jeff Bezos and if you lose money you lose money and there is nothing that could help you, no bail outs, no tax cuts, it is purely on your hands to make money. This is why decentralized finance will over throw traditional finance in time, obviously it will not be just few days but it is going to happen one day or another and I am sure of it.

[amishmanish]

The question is are we ready for it? Do you have the capacity to engage and build access??

The good thing about bitcoin and crypto is that we are in a world that money doesn't care about who you are. Whatever your race is, your religion, your gender, your nationality basically nothing about you matters, in real world if you are a very rich hedge fund kid with millions of dollars to play, you get backing from big names and you do whatever you want to do and you could lose tens of millions and still be bailed out by your father's business friends, that is how it works.

However in this world you could be Jeff Bezos and if you lose money you lose money and there is nothing that could help you, no bail outs, no tax cuts, it is purely on your hands to make money. This is why decentralized finance will over throw traditional finance in time, obviously it will not be just few days but it is going to happen one day or another and I am sure of it.

Very well said @SirLancelot. Cool name. You should join us in the BarnBridge Discord and the thread I have made about it. Please chip in with what you think about it. If you are into yield platforms, you'd know that BarnBridge has had a lot of attention the past few weeks.

We need people to have informed discussion on the DeFi phenomena. Like you said, it gives you the ability to use money in ways that only privileged bankers could till now. This is quite the double edged sword though. It is hard to tell if it will turn out to be really beneficial or just another fad.

While i wouldn't say that it'll overthrow traditional finance, it definitely has the potential to become an alternative. How it gets used depends a lot on whether people understand and build on it to have enough of a stake or whether it'll quickly get corporatized. As an example, how do we ensure that the decentralized governance doesn't end up as big money buying votes to effect outcomes in ways that benefit just them?

[Coinsfera]

Traditional Finance has wielded a lot of power over lives of people for a very long time. This is because Financial institutions decided the flow of money. Who gets the cheap loans? Who gets the backing and credibility and access? Money and Value is really about access and the power to influence. Banks have a hell lot of both.
Bitcoin, blockchain and crypto in general has enabled a lot of people to have a shot at wielding that power. The information barrier is not high and it does not ask for pedigree. You don't have to be a Harvard graduate to have your plans taken seriously. If you have the ability to take an honest idea and make it work using the blockchain technology, you can easily be the next big institution. Just look at all these DeFi projects with people locking funds in their custody.
The question is are we ready for it? Do you have the capacity to engage and build access??

We cannot deny the effect of traditional finance (TRFI) in our lives. First of all, everyone uses it for different purposes, taking loans transferring money, and so on. We cannot immediately leave the TRFI because it is too big to ignore. At the same time, it seems like TRFI not working in favor of all people, the riches become richer, and the poors become poorer. Here comes Decentralized Finance (DEFI). Are we ready for it- probably not all individuals know what is DEFI. DEFI is appealing to many people because there is no central body and it is cheap and profitable than TRFI in some sense. DEFI is getting larger and larger. https://twitter.com/coinsferaglobal/status/1356873212185952262?s=20 As you can see it worthed less than $3 billion in June 2020 and it is now $40 billion in market capitalization. Many people use it and it is getting better. As the competitions continue it will be more friendly than it is now. If it goes like that then we have the capacity to make it even more prevalent.

[barabeku]

The both has their ups and down but blockchain digital currencies are way better than traditional because the third party arrangement does not exist in the blockchain but in traditional financial institutions you have to visit the bank before you can carry out financial transaction.

This availability has played a cruel joke with many. You really don't have to be a graduate of a prestigious university to be successful in cryptocurrency. But without knowing the question, you are unlikely to be able to become truly rich. How many times have you made mistakes and lost money? Without understanding the matter, you should not go there.

[Mauser]

Traditional Finance has wielded a lot of power over lives of people for a very long time. This is because Financial institutions decided the flow of money. Who gets the cheap loans? Who gets the backing and credibility and access? Money and Value is really about access and the power to influence. Banks have a hell lot of both.

Bitcoin, blockchain and crypto in general has enabled a lot of people to have a shot at wielding that power. The information barrier is not high and it does not ask for pedigree. You don't have to be a Harvard graduate to have your plans taken seriously. If you have the ability to take an honest idea and make it work using the blockchain technology, you can easily be the next big institution. Just look at all these DeFi projects with people locking funds in their custody.

The question is are we ready for it? Do you have the capacity to engage and build access??

In my opinion there are two factors that made traditional finance so dominant over the last 50 years, knowledge and labour. Both of these two factors were fully controlled by big banks in the past. However, due the Internet and strong computers being available for almost anybody this is not the case anymore. As long as you have access to the Internet you can get the knowledge to do your own banking. We are definitely ready for decentralized finance.

[jan.nicolas]

You are right and it really is. Much depends on the person. But I also think it is necessary to add that HYIP is also necessary for this or that type of activity. Decentralized finance is in demand now, so I think that the easy integration of a new company is now on this.

[Bitstar_coin]

Traditional finance is not perfect, I don't think it was design to be perfect but it was able to get the job done for years ago and still doing so, am not looking to have a freedom of money but just looking to have a very secured system,

Those clamouring for decentralise finance have their reason for that, (to each with their desire) however, since the introduction of decentralise finance, how many individual are actually using it for their daily activities or whatever ways it is used? Do they get the satisfaction Traditional finance was not able to provide for them? I just want to know if this is being put in practice and not just in theory only.

[zasad@]

The main plus of decentralized finance is that we do not need intermediaries in the form of banks, lawyers, experts, analysts, insurers, who receive a part of the profit from each transaction and increase the cost of services.
The second important stage in this revolution should be the acceptance of cryptocurrencies as a means of payment. Now you can pay with cryptocurrencies for goods or services in some countries, but this works through intermediaries - financial and other organizations.
It is very important that the second stage comes as quickly as possible.

[maxreish]

We are at the start of new way financial system used blockchain using defi. And yeah, you don't need a degree to pursue dreams like integrating blockchain system in supposed business plans. As long as one is very much informative about how this defi works.

The question is are we ready for it? Do you have the capacity to engage and build access??

We are totally ready as we see some improvements using these projects. As long as it is for the better, engaging ourselves into this kind of system take courage and optimistic minds. If there is an opportunity and we grab that for good purpose, success follows.

[semobo]

Traditional Finance has wielded a lot of power over lives of people for a very long time. This is because Financial institutions decided the flow of money. Who gets the cheap loans? Who gets the backing and credibility and access? Money and Value is really about access and the power to influence. Banks have a hell lot of both.

Bitcoin, blockchain and crypto in general has enabled a lot of people to have a shot at wielding that power. The information barrier is not high and it does not ask for pedigree. You don't have to be a Harvard graduate to have your plans taken seriously. If you have the ability to take an honest idea and make it work using the blockchain technology, you can easily be the next big institution. Just look at all these DeFi projects with people locking funds in their custody.

The question is are we ready for it? Do you have the capacity to engage and build access??

Eliminating the intermediatory is the biggest advantage of decentralized finance but it is possible to become beneficial for everyone who is in need of a loan? People who need money may not have enough money to give it as collateral as other coins but in traditional finance they can get loans for the property and if they default it then the property can be seized.

[hatshepsut93]

Crypto itself still heavily relies on centralized finance, as centralized exchanges host the majority of crypto market volume. This is why governments are not scared of crypto - they understand that if you regulate exchange you have successfully regulated crypto. And this is why companies like PayPal and Visa are creating crypto products - they too don't feel threatened that crypto will replace them, they see it as an opportunity to make more money.

Traditional finance is still as strong as ever and there are no signs that crypto is a threat to it. For now.

[Karartma1]

The main plus of decentralized finance is that we do not need intermediaries in the form of banks, lawyers, experts, analysts, insurers, who receive a part of the profit from each transaction and increase the cost of services.
The second important stage in this revolution should be the acceptance of cryptocurrencies as a means of payment. Now you can pay with cryptocurrencies for goods or services in some countries, but this works through intermediaries - financial and other organizations.
It is very important that the second stage comes as quickly as possible.

Yes, I agree there needs to be some form of paradigm shift at some point in time where Decentralized Finance starts taking over the old world. It is also a cultural matter if you think: the majority of people have never had any doubts about the economy, it was kind of set in stone and whatever the financial world provides that's all there is. Not anymore since the inception of Bitcoin.
Bitcoin was the first step towards that: I am not a big fan of DeFi on Eth (too crazy now), but the tools on the right platforms are good. I think in twenty years time there will no such thing as traditional finance anymore, as it is rapidly changing to somehow challenge what's coming from this side.

[amishmanish]

Great responses in this thread guys.. It is necessary that we ask questions beyond just speculating about our own projects. My aim in starting this thread was to get such interactions and concerns about the space discussed. The discussion till now has been really good.

how many individual are actually using it for their daily activities or whatever ways it is used? Do they get the satisfaction Traditional finance was not able to provide for them? I just want to know if this is being put in practice and not just in theory only.

Good questions. Right now most people are using the DeFi lending platforms to take loans or to lend their crypto-wealth to earn returns on it. The satisfaction with relation to TradFi cannot be measured because TradFi doesn't give this level of control or returns to anonymous individuals.

The second important stage in this revolution should be the acceptance of cryptocurrencies as a means of payment. Now you can pay with cryptocurrencies for goods or services in some countries, but this works through intermediaries - financial and other organizations.
It is very important that the second stage comes as quickly as possible.

This is a difficult and tricky part. This has no easy answers but this much is sure, the solutions have to come from within the community. It is clear that the hundreds and thousands of individuals in this space aren't criminals or tax evaders. Yet, it is highly unlikely that the Govt will allow them to function without getting some sort of share.
The industry has to come up with its own standards and self-regulations.

Crypto itself still heavily relies on centralized finance, as centralized exchanges host the majority of crypto market volume.
--snip--

Traditional finance is still as strong as ever and there are no signs that crypto is a threat to it. For now.

Totally true. The starting post is more of an invitation towards thinking in DeFi terms vs TradFi terms and not pitting each other. It can be seen as an opportunity for more people to become part of the "game" where only a very few had access or, more importantly, interest earlier. There is a flurry of activity and it will continue to remain significant.
How does that play against the goal of privacy is something that the community is divided over?

Yes, I agree there needs to be some form of paradigm shift at some point in time where Decentralized Finance starts taking over the old world. It is also a cultural matter if you think: the majority of people have never had any doubts about the economy, it was kind of set in stone and whatever the financial world provides that's all there is. Not anymore since the inception of Bitcoin.

Love your view on this. It is indeed a cultural and a empowerment thing.

Bitcoin was the first step towards that: I am not a big fan of DeFi on Eth (too crazy now), but the tools on the right platforms are good. I think in twenty years time there will no such thing as traditional finance anymore, as it is rapidly changing to somehow challenge what's coming from this side.

Good point. The TradFi or Big Money may have to evolve and in a best case scenario, will become more transparent and not as easily manipulated and corrupt as it is at present.

From the above, we can agree that quite a few people are ready for the DeFi vs TradFi argument. So as for the discussion to not get repetitive, I'll summarize a few points on which opinions would be appreciated from your experience:

1. How should DeFi balance the need for Privacy as well as conformance?
2. Will you continue to invest if it becomes linked to KYC like the exchanges?
3. Would you like to see a consolidation or continued proliferation of projects?
4. What is your style?? You jump around or get involved deeply.

[cilgindansci]

The world order is now changing and ideas are updated on many subjects. Economy is one of them. Decentralized finance methods will now override traditional finance. It is very difficult to happen at once, but decentralized finance is getting stronger. With the new economic order, economic transactions will be cheaper, transparent and secure. We all believe in this to the fullest 

[leea-1334]

In my opinion there are two factors that made traditional finance so dominant over the last 50 years, knowledge and labour. Both of these two factors were fully controlled by big banks in the past. However, due the Internet and strong computers being available for almost anybody this is not the case anymore. As long as you have access to the Internet you can get the knowledge to do your own banking. We are definitely ready for decentralized finance.

Actually also unfair control over the resources of knowledge of labor,,, as you said the monopoly by big banks. It is a bigger system than that. Companies and banks and governments are all interlinked. They have a huge network. You go to school together, you get internships and jobs together, and you end up working together. To go into their circle you must comply.

Internet helped to break this but in the end internet and knowledge now is also controlled by the same circle more and more. Google and Yahoo etc all joined that circle.