Finances without intermediaries
Defi on Bitcoin
The world is going digital. We have seen this in all areas. Computers, the Internet, and smartphones have changed how we use paper, read books, spend our free time, and even build personal relationships. Money and finances could be the next step.
Digital currencies are growing. They eliminate intermediaries like banks and sometimes even States. That makes it possible to give and receive money even faster and cheaper. Bitcoin is the most widely-used digital currency.
Digital finances (DeFi) are going to grow since digital currencies are useful in making payments. But many other financial services are not possible with just digital money. Contracts, insurance, loans, and saving plans are only some examples. Banks are providing these services, but there are many inefficiencies. There is no doubt that most consumers are not happy with most financial institutions' roles. Digitalization could eliminate intermediaries, simplify processes, and make things faster and cheaper.
Computers, the Internet, smartphones, Bitcoin, DeFi: it seems the logical evolution.
Each wave needed the technology, knowledge, infrastructure, and even cultural change of the previous stage. We are in the smartphone age. Bitcoin and digital currencies are going behind. Decentralized Finances (DeFi) could be next, and they are very close.
Decentralized and Centralized
The concept of Decentralized Finances (DeFy) is trying to solve many of the problems that traditional banks are generating.
Centralized systems use banks to create the services and courts to arbitrate in case of conflict between parties.
Digitalization can remove gatekeepers, improve the speed and efficiency of the services, and reduce those intermediaries' costs.
Time has proved Bitcoin to be secure money. We can pay and receive money without a central bank. But Bitcoin alone cannot provide the other services that the financial institutions offer. Bitcoin has a very basic programmable functionality, which is a technical limitation. We cannot build contracts, borrow money, or make insurance, for example.
## Ethereum, DeFi without Bitcoin
Ethereum is the world's second-largest cryptocurrency platform. Here it is easier to build applications that go beyond simple transactions. It has a programming language called Solidity that offers more flexibility.
Many programmers have created DeFi solutions on top of Ethereum, that is, finance products without intermediaries.
But there are still worries about security. Bugs are still very common. It is difficult to separate good projects from the bad, especially if you are not an expert.
DeFi on Bitcoin
There is another wave that has tried to create DeFi services on top of Bitcoin. It has many advantages.
Bitcoin was invented in 2008. Since then, it has been proven secure and spread around the world. DeFi on Bitcoin can rely on Bitcoin and build on top of it.
Blockstack is a computing platform founded in 2013. It uses Bitcoin as a currency and its blockchain as a security mechanism.
We must remember that security systems consume a lot of resources, especially electricity. Building on top of Bitcoin takes advantage of its security without duplicating services.
Blockstack gives programmers the possibility to create Decentralized Finances services on top of Bitcoin.
DeFionBtc takes another step. They are less known, and also, perhaps more exclusive. Experts or at least insiders use them. It is for entrepreneurs in startups, especially for people in a narrower area of Bitcoin, Blockchain, and Cryptocurrencies.
All the knowledge fields have their terms that help members be more precise and efficient when they speak and explain anything. But those words also act as instruments to create bonds between the users. In some way, they represent a group of people and communicate affection or, at least, feelings that go beyond the mere technical side.
Remember that a brand is anything that identifies something as distinct. It helps us communicate complex concepts in a fast and more straightforward way.
The words that I talk about in this section have many of the characteristics of a brand. In any case, all this is very new and in the process of construction. The success of the brand is tied to the product, service, and technology behind it. We also have to take into consideration the emotions that they arise.
Society needs more efficient financial services. An essential part of the population suffers from economic discrimination and high fees. New technologies will make it possible to remove intermediaries and make processes faster, cheaper, and more efficient for more people.
Financial services without intermediaries can rely on the security of Bitcoin and, at the same time, offer more complex services to go beyond just sending and receiving money.
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