DeFi vs. Traditional Finance: A Battle for the Future of Banking


Decentralized Finance, known as DeFi, is a revolutionary system of financial services, poised to take over where the traditional financial sector is failing to provide.

What is Decentralized Finance?

DeFi is a financial ecosystem where services like lending, payments and staking run on a blockchain. Decentralized finance projects are exciting because they cut out the middleman and lower costs, as smart contracts automate most processes using public information available on the blockchain.

The infrastructure is designed to be flexible and new tools are constantly being added. DeFi already provides an alternative to traditional finance for most essential services, with greater customer rewards.

People-powered finance

Change in traditional finance can take decades and the decisions are made behind closed doors. In DeFi, innovation happens in real time. In theory, any one who wants to pitch in, can. DeFi is permissionless, meaning anyone can contribute code to the network. Users can even vote on proposed changes. The gatekeeping of traditional banking no longer applies.

While some high-street banks have adapted to an online world, they still retain ownership of your money. DeFi goes one step further. Decentralized wallets are non-custodial, meaning you alone have control of your funds and are responsible for your own private keys.

Traditional Finance protects its interests. DeFi builds.

The dinosaurs of traditional banking claim to play a role in making the world a better place. Yet inequality and financial exclusion still exist.

These traditional banks need expensive physical infrastructure to function and neither companies nor governments are keen to foot the bill. Consequently, customers have to travel miles for substandard and costly service.

DeFi not only puts you in a position of power over your money, but also brings a brighter financial future for the 1.7 billion unbanked people around the world. Here’s where decentralized finance leaves its competitors in the dust: From Midtown Manhattan to the middle of the Masaai Mara, all anyone needs to take part in the financial world of the future is an internet connection.

While traditional finance respects borders, DeFi does not. In a decentralized network there are no additional fees for international payments and no need to chop and change between real world exchange rates. For workers sending money home from abroad, DeFi could slash up to 50% or remittance costs.

So long, volatility

Volatility has long been a thorn in the side of crypto. But DeFi’s use of stablecoins, tokens pegged to stable assets or currencies such as the U.S. dollar, is changing that. Stablecoins represent a safe, transparent equivalent to traditional currencies. No central authorities, no quantitative easing.

But that’s not all. Exchanges are also decentralized, meaning that if one important trading hub falls, there is no single point of failure. All information is stored across thousands of computers connected to the blockchain.

With DeFi transaction volumes soaring into the billions, decentralized exchanges are already playing a central role in the future of finance.

Save safer, earn smarter

Old fashioned high street banks are desperately clinging to the reputation of being the best place for your money. But why? Interest rates are slashed year on year as economies struggle, yet fees remain the same.

With no reward for placing their trust in institutions, customers are turning to DeFi for their financial needs. Decentralized finance offers the same services as traditional banks but with fewer barriers to entry and lower costs.

DeFi uses digital assets as collateral and smart contracts to make lending more effective. With interest rates often 20 times higher than traditional banks, users stand to benefit from participating. As traditional finance institutions offer customers less for the same service, the appeal of more lucrative options is growing fast, with over $3.7 billion in loan DeFi transactions taking place since March.

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DeFi: Banking, democratized

DeFi may be the new kid on the block but it is already a viable alternative for most important financial services.

For decades, customers have had no choice but to accept the conditions set by an antiquated banking sector. But the wave of DeFi adoption shows that users want control of their finances and to define their own terms.

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