Within the last few years, a new phenomenon within investing has taken hold and changed the world of investments for the better.
Spurred by the proliferation of new tech, a wave of apps, web portals, and tools have opened the gates to wealth building for new retail investors previously shut out by the old guard.
What was once watched over by brokerage firms and brokers is now available via a download.
This democratization of investing has allowed new money to pour into the system and allowed new individuals the opportunity to determine their own financial futures.
And while world markets currently grapple with a once in a generation crisis, it is the perfect time for some good news and to look towards a few successes.
With that, let’s explore digital solutions within investing and the power of DeFi to truly open portfolio building to a larger audience.
The Beginning of the End for Brokers
Those that have followed the sector in recent history can still remember a time when building an investment portfolio involved utilizing brokerage services.
With their services also came a cost, tying the ability to afford their fees to building investment portfolios.
This led the current view of investing as a means of securing financial freedom, that it is only available to a certain demographic.
And that’s the way things worked.
That is it was until apps began entering the market with the purpose of bringing stock trading to the general public.
Soon, apps began to branch out beyond the traditional stock model of investing and incorporate more complex, yet higher return, opportunities such as options trading.
With this influx of apps, the world of investing began to open for a new demographic of investor.
What was offered to only a select few now became available for everyone.
And as the barrier for entry into investing was lowered, the beginning of the end for brokers was soon on the horizon.
DeFi-ing the Standard Model of Investing
When looking towards the success of apps aimed at opening investment opportunities to the greater public, it is important to view this as a starting point and not the end solution.
Whereas the first wave of barrier busting apps allowed more people to join a world unavailable to them, the apps were not without flaws.
While the ability to democratize investing began with these apps, many followed in the footsteps of the very services they sought to replace.
Many platforms charged fees per trade, centralized user funds under their control, and caused a fair bit of controversy spread across the industry.
So, while these apps should be given proper credit for starting the democratization of investment opportunities, it was still necessary to find a better solution.
DeFi would become that solution.
As an answer to the centralization issue, DeFi based platforms allow their users to remain secure in the knowledge that if something were to go wrong, their funds would remain relatively safe in comparison.
To combat the lowered barrier, but barrier nonetheless, of brokerage fees, many DeFi based applications did away with broker fees entirely, opting for a model that didn’t pass the cost of operation onto end users.
Instead platforms were crafted upon innovation that would be leveraged to lift everyone in the process. This often took the form of utility tokens tied to a platform in which users or traders could “buy” into a platform while still receiving an opportunity to earn ROIs on that investment.
So, that’s it. Democratization complete?
As DeFi still moves towards a broader awareness within mainstream audiences there is still work to be done.
Fortunately for investors, several platforms have taken the steps towards providing financial opportunity on a large scale to those the previous systems ignored.
As progress continues to be made, those opportunities and the people that benefit will continue to grow.
So, while platforms continue innovate within the space, the eventual end users will be the ones to bring about democratization through utilization.
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