"Don't challenge DeFi"This is how it was expressed on March 25 Elon Musk, King Midas of the 21st Century, in his Twitter account.
DeFi is the abbreviation of Decentralized Finance or “decentralized Finances”.
Deleted by the anagrams and the relationships between letters and numbers, the message invites us to “do not challenge the Decentralized Finances”.
What are decentralized finances?Decentralized finances are all those financial transactions that are executed under Blockchain technology and that are carried out through the Internet.
From the thousands of cryptocurrencies that exist, to certificates, smart contracts, protocols and applications such as electronic wallets, or the powerful transactional platforms that allow to generate closed or open transfer ecosystems, are part of the tools and products that together propose in a short time that global banking and financial systems will be managed and communicated in a different way than what they do in our days.
The ambitious goal pursued is to allow user interaction with the platform directly, leaving behind the intermediaries.Blockchain technology allows you to generate self-sustained ecosystems without the need for a central entity that regulates them. Everything by keeping the security, privacy and trust of the system.
Financial inclusion (an unsatisfied market)
Thousands of millions of people in the world don't have access to financial services, they're usually the most profitable people they could take in case they count. Although the world financial system has a high degree of development and penetration of the transactional infrastructure does not reach all sides and for all people in the same way.Decentralization resolves current infrastructure failures quickly, easily and at low costs, ensuring that records can be stored and shared between different network access points.
Open code (one way)
Currently there are protocols and programs that allow to build ecosystems for financial exchange and to generate relationships between them, generating networks of production, distribution and semi-open consumption that minimize costs by marketing and intermediation in payments.This is where the paradigm shift resides. We count on our days with the possibility of arming our own non-bank transfer networks, using open source software, this feature allows any programmer to use complex developments that have insumed years of work as a starting point for their particular projects, optimizing both resources, time and money.
Digital credit identity
Decentralized finance tools enable the parties to report the background on previous behaviors, generating a digital background-based credit identity and reputation, product of past commercial and transactional experiences.Digital identity will be a quality that transcends governments.Organizations specializing in managing and sorting databases, using artificial intelligence, can issue globally and self-managed credit risk notations by offering traders and investors to avoid intermediate costs by uniting both ends of the relationship.
Certificates in Blockchain will be key tools to ensure the integrity and authenticity of documents.
Products and Costs
DeFi will impact in many ways:- access to financial services to people who currently have no possibilities,
- The connection to small trades of proximity with the means of payment accessible only to formal establishments,
- lowering transaction costs,
- developing direct relations between producers of regional economies and consumers,
- Reducing costs by financial intermediation,
- allowing multi-monetary platforms to arbitrate simple and secure external trade operations.
So who could challenge the DeFi?
Members of current financial, banking and transactional systems may resist change, perhaps they are the ones Elon Musk is targeting his warning.
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