While the rise of crypto, digital assets, and decentralized platforms have transformed DeFi from buzzword to pathway beyond dated models of finance, there exists a bit of one dimensional understanding regarding the space.
As DeFi moves towards a more visible platform within mainstream view, it is necessary to explore the space as it exists; that being one that has evolved to encompass much more than simply lending or borrowing.
So, as we look towards building a future in finance in which decentralization becomes the benchmark for value, it is pertinent to widen our understanding of DeFi.
With that, let’s explore a selection of spaces that are being transformed by decentralization.
DeFi Redefines Security
While decentralization often finds itself interlinked with the markers of value within the crypto space such as tokens, platforms, or coins, there exists projects that are seeking to expand beyond that.
As cybersecurity becomes a more inherent component of finance within the digital era, the need for systems in which trust is one built upon validation without centralization becomes necessary as well.
Given even traditional banks are now exploring the utilization of DeFi, it was only a matter of time before the traditional methods employed by banking began to adapt.
Take for instance the facet of DeFi dedicated to reducing money laundering and financial malfeasance, Decentralized Identification Verification or Decentralized Identity.
Whereas the old methods of deterring the financing of crime, much as the banks that utilized them, required a centralized approach, as the space evolves so must the methods.
This has given the space a growing number of projects dedicated to providing the same Know Your Customer services required of traditional banking though via a decentralized platform.
Inherently harder to bypass or manipulate, the decentralized projects allow those still within the traditional finance world the opportunity to leverage the next wave of finance without a complete overhaul.
DeFi Redefines Services
In addition to improving the methods used by traditional banks, decentralization projects are actively seeking to replace some traditional services.
Aspects of traditional banking such as asset management, savings, and, yes, even lending are able to leverage the inherent security as well as trust built into decentralization.
At the current moment, there exist a variety of companies offering a decentralized solution to traditional savings as well asset management, with numbers growing continuously.
As witnessed in several economic downturns, when vital aspects of an individual’s financial future are left in a few centralized hands, the opportunity for manipulation, loss, and, in some cases, fraud will always exists.
Though, when employing decentralization, the opportunity for one group to determine the fate of another’s financial future becomes much more difficult. It is with this understanding that decentralization is taking a foothold in what is often considered traditional banking’s services.
DeFi Redefines Data
Beyond the traditional roles of the banking sector, a facet of DeFi is redefining the platforms utilized in Big Data.
Aspects of data modelling used in prediction and analysis are now experiencing the decentralized treatment as many turn towards a more trusted source of data usage.
Whereas, prediction and analysis require that those utilizing the end results trust the one providing it, decentralization allows for a process that can be inherently validated and trusted while not opening itself to manipulation.
As more companies begin to understand the place of Big Data within their operations, this facet will find itself bridging the gap between DeFi and those that might not be expected to operate within the space.
This could allow for further adoption across other facets as the push towards mainstream consciousness continues.
A Push Towards Evolution
While the above are a small representation of the varied aspects that make up the push towards decentralization, they serve as evidence that the space is expanding beyond what it once was thought to be.
And as more innovative solutions continue to be proven, the opportunity to employ decentralization will only continue to grow.
For now decentralization may be the future of finance but given enough time it may become simply the future.
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