The Future is Decentralized Finance (Defi)?

Decentralized finance (DeFi) may have started over a decade ago but now it’s really heating up the world over meaning the newly emerging world of financial systems might be finally upon us.

Could it eventually displace the current financial system? 

The Emergence of DeFi

Decentralized Finance (DeFi) is actually an umbrella term for crypto and financial applications working off the blockchain – Currently most DeFi protocols (autonomous programs) live on the Ethereum blockchain. DeFi protocols allow transaction and financial services to operate outside the traditional control of centralized institutions; instead they use smart contracts on the Ethereum blockchain removing the need to place your trust in any financial institution.

The protocols are interoperable which means they can be used by multiple entities at the same time; making them perfect for building out decentralized Apps ( DApps) for lenders/borrower, seller and buyers to interact peer to peer and only ever using software based ‘middleman’ removing the need for institutions to facilitate the transactions.

Check out various DeFi projects currently in action which include decentralized exchanges and various lending platforms

DeFi is essentially made up of countless decentralized, non-custodial financial products across an open ecosystem allowing anyone with an internet connection to join and gain access to a range of financial services. This opens up the world of finance to those previously unbanked and with it countless opportunities.


The DeFi future is exciting

Imagine a world where anyone can access financial services freely, efficiently and without discrimination?  Well that is what DeFi is giving us, ultimately endangering the old world of financial services. Many traditional providers will have to adapt or risk fading eventually into obscurity if these projects continue to grow and expand by offering the world a better alternative to what we currently have. 

Decentralized finance opens up the world to the previously unbanked which has many advantages; not just for those individuals, but for entire nations on a broader macroeconomic scale –   Easier, frictionless borrowing/loans, insurance and raising of capital will help stimulate innovation and encourage more entrepreneurship, something the world needs more than ever now old industries continue being disrupted and mass job loses are inevitable.

DeFi will have wide ranging implications and benefits the world over, but most impressively is its ability to potentially lift more and more people out of poverty and give new hope to an entire generation.

A word of caution: DeFi infrastructure is very much in its infancy and suffers a number of issues around scalability, cost and speed due to relying primarily on the Ethereum blockchain to settle the transactions. As DeFi becomes more popular the cost of transaction will rise further since some Ethereum is used each time. There are plenty of problems that need to be solved and one is cross-chain transfer of data /assets and not being so reliant on Ethereum.

Jobs within DeFi

DeFi is still new, experimental in many ways, meaning before jumping onto a project it be a good idea to delve deep and gain a strong understanding of the project and any associated risks. The great news is there is relatively little competition with many venture capitalists and investors circling around this space hence plenty of lucrative opportunities to be had.

DeFi developers are of course in-demand but to become one you will need a solid understanding of data structures,  cryptography and networking. A deep understanding or background working within the financial services sector will give you an edge but not always necessary for many opportunities.

Want to learn more about DeFi?

We don’t blame you if it’s a YES! Now is the time to grasp the basics of various DeFi platforms and use cases before deciding to do a deep dive into the full DeFi ecosystem. If you wish to future proof your career and currently work or interested in working within finance, insurance, banking/lending or cross boarder payments than explore some our recommended accredited courses.

Explore a range of accredited courses to take your blockchain career onto the next level. 

For an in-depth overview of the DeFi ecosystem visit the blockchain council