DeFi is great but it won`t be easy
Even though DeFi is likely to be a positive thing for us, this possibility does not negate the inevitable falls. Just look at the hacks, loss of funds and user data.
Questions that need to be answered
Remember how the Internet opened up a new era for us? A similar event is just around the corner, and it will be even more revolutionary. What’s the spark this time? Blockchain technology.
One of the most common ways to use this technology is DeFi (decentralized finance), in particular cryptocurrency, or more precisely, Bitcoin. As public consumption and criticism of cryptocurrencies increase, so does the pressure on the government to regulate. Last month, the SEC said it needed more time to think about allowing Bitcoin ETFs. This development doesn’t mean that DeFi is bad, no. This simply means that mass integration is far from easy.
Simply, the decentralization of currencies is becoming an inevitable event in the history of world finance. Blockchain, Bitcoin, etc., are all widely discussed topics. But one common problem in these conversations is misunderstanding. If we don’t understand these technologies, we won’t be able to accurately discuss their possible applications or drawbacks.
So, let’s clear up some confusion.
- First, people tend to combine cryptocurrency with blockchain technology when the latter is much more extensive.
It’s a simple, decentralized way to build efficient systems and seamlessly transfer information, whether it’s healthcare, finance, or anything else that requires security. Many people do not fully understand the impact of blockchain, but we know that this is the wave of the future, which is already sending us vibrations.
Meanwhile, cryptocurrency is just one of the applications of blockchain technology. Ethereum is a programmable blockchain with which innovators can create endless decentralized applications. So, the difference between cryptocurrency and blockchain is the first step to participating in the conversation.
- Second, we need to understand the DeFi movement.
Decentralized finance is a cover over cryptocurrency. Many believe that the DeFi movement is a positive event for society. Every time you eliminate intermediaries (whether governments or private institutions) and allow people to interact with each other, you open up new opportunities for economic freedom. No, they will not replace the traditional currency, but they will offer people a choice, and allow them to break out of the ordinary transactions.
Regulation must be reasonable
Our global financial system creates winners and losers, and causes many social problems that are beyond the scope of this article. DeFi could honestly try to solve these problems.
Finally, even though DeFi is likely to be a positive thing for us, this possibility does not negate the inevitable falls. It will not become mainstream without numerous objections and criticism. The Government remains cautious. He has a lot of questions about cryptocurrency that are unanswered, namely: who uses it, who tracks it, and how people use it.
After all, there is no disputing the fact that insufficient regulation of cryptocurrency can lead to coins such as Bitcoin being used for nefarious and dangerous activities such as drug trafficking and sex trafficking.
So, in principle, we can understand why the SEC is slowing down the decision to make a Bitcoin ETF. However, this is a balancing act, because too much regulation of cryptocurrency can stop the growth of our financial future. We’ll soon see how complex these calls are when the debate comes to the fore.