Since Raise was founded, we've fielded several questions from lenders and borrowers as to why we decided to launch our platform based on blockchain technology.
As a team, we all share the belief that this technology will bring security and transparency to the financial world. This is important to us as we continue to embark on our journey to disrupt centralized entities and take our DeFi product to the next level.
As part of our value proposition, DAI a stablecoin from the crypto world was introduced to fund our loans. We don't do any transactions with the standardised fiat payments, but why?
Fiat would be hypocritical when our aim is to decentralize the finance industry.
Fiat is what we all recognize as traditional money. This has and always will be controlled and regulated by our governments. The value of our money is maintained by our centralized entities and, as a result, we see changes on this value based on political events. The best example of this has been documented worldwide over the last 3 years. Pound Sterling (£) is the second strongest currency in the world and the main reason the United Kingdom never entered the eurozone at the start of the millennium.
In 2016, the citizens of the whole of the United Kingdom voted on a referendum to leave the European Union - Brexit as it is referred to by the world's media. This was unexpected and left the country with many uncertainties that will only be fully resolved over the next 18 months. There have been many different situations within the government over this issue that has caused a big drop or massive gain in the value of the pound since this has happened.
This Government-led money is a commodity to market makers. All the money that is issued has to be declared by the government as legal tender. Money is never fixed in value and the Government could one day turn around and make some notes and coins value-less. This happened in 1920's Germany and more recently in Venezuela.
Even though cryptocurrency has been seen as an investment for many, the original purpose was to be a store of value and a digital currency for those who seek a break from traditional fiat.
So what are the 4 best benefits for using Crypto over Fiat?
1. Lower Transaction Fees
Have you ever tried sending money abroad?
Have you ever tried sending money domestically?
Fees and charges are everywhere. You might notice them, but they are there and it makes it costly for the sender and the receiver.
Using cryptocurrencies like DAI significantly reduce the fees for transactions, therefore the recipient gets the exact amount of money that you intended to send.
2. Faster Transactions
To be fair, this is improving with banks and money transfer applications but it is still quite slow. This improvements mean that most people receive transfers within 24 hours, but realistically, the general rule of thumb is that transactions reach the recipient account within 2-3 working days. This problem is solved easily when using DAI, as you can see your money in your account within minutes...even on a weekend.
Banks are a safe way to keep your money, but they are using your funds for investments and lending. This means that there is always a risk. Northern Rock's customers famously lost all their savings in 2007 and customers had to be financially rescued by the UK Government.
DAI is much safer as you have full control over your money and you store it yourself in your wallets. You are the one who manages your assets and there is no middle man taking that power away from you.
4. Secure Payments.
We all know that DAI and all other cryptocurrencies are more secure than other payment methods. Using fiat puts you at risk due to the personal information needed for each transaction. Cryptocurrency transactions are done in a transparent way where only the address holders truly know who the owner of their address is. Payments are irreversible and there is no need for personal identification. Everyone is at less risk of having their personal details stolen and money being returned.
What more do you need?
We know that blockchain and cryptocurrencies allow us to use our solution in the most transparent, secure and safe way. We want this to be mirrored with both our borrowers and lenders as using DAI to invest in an active loan is entirely beneficial to all parties.