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How TradFi Killed our Economy

By Justino | An Angle of Truth | 15 Nov 2023


TradFi

This is a term the crypto community call Traditional Finance. It refers to the mainstream financial system. In many words, this is your bank and institutions operating under strict government regulations - a system we've had over a century, that has defined how we store, make and move money.

Ushering in 2008, we had the financial crisis that was the catalyst that sparked the development of the first use case of the Blockchain technology - Bitcoin. The creator, Satoshi Nakamoto, who I'll refer to as they, saw the traditional system as rigid and bloated, not transparent nor accountable.
Much of TradFi is privately owned, centralized, with profits circulated amongst a few individuals. And much of its crisis' is the result of its opaque and rigid systems.

DeFi

What a decentralized financial system built on a blockchain aims to do, is to decentralize finance by:

1. Opening it up to scrutiny before mistakes happen. This would make suspicious actors more accountable.

2. Being permissionless. It enfranchises marginalized communities where one doesn't need formal qualifications, or exposure to the inherent biases of traditional systems to access finance.

3. Ownership of your assets, which is empowering itself. However, the cons to this is, you don't have another entity to hold accountable if you lose your assets.

4. It's deflationary. We all know the effects of inflation. Not to mention the lower remittance fees.

The Conundrum

An article was published on the International Monetary Fund's website, that said, "DeFi and TradFi must work together". And unfortunately, the IMF dictates quite a number of Africa's financial policies because of the loans they take. Recently, the Kenyan government put out a tax on digital assets, including cryptocurrency. That means there's recognition of a growing DeFi space.

So has TradFi really killed our economy?

I would say no. We just need to get into the TradFi space, talk to these individuals and explain to them how DeFi can help resolve the inefficiencies in TradFi.

 

The views expressed here are my own as I'm not a financial expert.


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Justino
Justino

Self-Published Author. Editor.


An Angle of Truth
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