How Crypto and DeFi Create Solutions for the Unbanked
Bank, DeFi, Unbanked - September 24, 2020
The current craze of cryptocurrency and decentralized finance markets is the crypto arbitrage and DeFi coins. Originally, crypto was meant to be a bank for those who couldn’t afford one. What does this mean?
The problem in the developing world is not that there isn’t a banking system to be a part of, it’s that this banking system does not have any trust. There’s a lack of trust in the bank, the government, and the legal and financial structure that backs it. If money cannot be put into the banks because of a lack of trust, where can it be put? Is there an alternate system?
This is where Bitcoin and the DeFi world comes in.
Bitcoin is a cryptocurrency with a limited supply. Unlike currency which can be printed to an unlimited amount, there’s only 21 million Bitcoin that can ever be created. Ever. But while its supply is fixed, its value is not.
Those who want a way to store their wealth in an asset which not only has value, but retains it over time, they can look to other cryptocurrencies. Dollar-backed stablecoins, cryptocurrencies which are roughly equal to $1, provide this. USDC, DAI, USDT, are some stablecoins which are not only digital, but are stable.
Now, we have two types of currencies – one that is limited in supply, and one that is stable. The common theme between them is they are programmable, digital and decentralized. What’s more is there is a growing infrastructure to allow these currencies to provide financial solutions, its parts include,
- Blockchains: For transparent and convenient transfer of cryptos
- Wallets: For storage of cryptocurrencies
- Networks: For bringing together people into the system
DeFi beyond the basics
These are just the basics. In the growing DeFi world, there’s so much more you can do with your cryptocurrencies. Protocols which allow lending, borrowing, investing, have made it easy for anyone to not only store wealth, but grow it over time, all with stable, fixed and digital currencies.
Think about what this can do for someone who doesn’t trust the banking system. This allows those ‘unbanked’ to participate in the financial economy, it allows them to take loans, save and store their wealth, make investments and multiply their earnings. What’s even more exciting is that this is done with no fees and no friction.
In this video we talk about the kind of system that the decentralized finance world is building and how it can help the unbanked.
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