The future of finance is decentralized!

By Ehis Omozusi on The Capital

Published in

The Capital

6 min readJul 10, 2020

Recently, I was speaking with a friend who disagrees that finance will fully be decentralized. While I believe that the future of finance is decentralized, I am aware that this future we hope for can’t magically appear tomorrow even if we want it to.

Imagine a world with little or no middlemen, boardless transactions, financial inclusion reaching ninety-nine percent, stress-free know your customer (KYC) processes, and so on. Where you have no restrictions on what country you can get a loan from and who you are lending to. As long as your money is secure and using properties for collateral wasn’t a criterion. That’s what Blockchain technology is bringing to us. Slowly but surely.

Look at how finance has evolved to date. The way in which we conduct our leisurely purchases and expenditure has changed so much, that we can now pay for services and goods from the comfort of our rooms and the click of a button. A few years ago individuals were expected to physically go to the nearest bank to pay their utility bills and subscriptions, we had no choice but to carry loose cash around, a practice that is gradually fading away, only kept by the older generation that was here before the invention of technology.

Fintech companies have been disrupting the traditional finance system for the past decade, only in recent years that this is evident with a lot of businesses on-boarding fintech apps for collection and disbursements of funds. One of the major ways fintech companies have an edge over traditional banks is through responsive customer service. For any business, excellent customer service is important especially when money is involved, customers need to be communicated to about the state of their finances on a regular basis, and when issues occur.

On the flip side, online banking has led hackers to become more equipped with different ways to steal identities and card information. This is a perfect scenario in which blockchain technology for finance comes in handy. Blockchain technology is the underlying structure of most cryptocurrency systems and it is what prevents these digital currencies from being duplicated or destroyed. Blockchain is a series of data blocks as the name implies, each containing a unique hash number and a link to the previous block.

The use of blockchain is being explored in industries where data immutability and security are of utmost importance and also for transfer of digital assets. Like recording and tracking charity donations, medical databases, as well as supply chain management. Most blockchain networks are decentralized and distributed over various nodes in different locations. A system without a single point of failure is much harder to hack into and corrupt, a hack into one section of the system will not affect others. Although, this function is not fully utilized in cases of private blockchains, as they have a limited number of nodes and a single point of control, restricting who can make changes to the ledger. Private blockchain is somewhat centralized to give the organization more control over its processes but sacrifices one of the major security advantages of the blockchain which is the absence of a single point of failure.

The first step towards this decentralized future of finance will be for us to understand that the traditional finance system and the new blockchain era can work hand in hand, with the old financial institution mapping the details of their transaction to the blockchains and its distributed ledger to store transaction information. This can be done through a cross-chain technology on the blockchain. DeFi innovators like Maker, Synthetix, and Compound attempted to move traditional financial products onto the blockchain but their efforts were hampered by the slow operation and processing speed compared to the traditional finance system.

When trying to replace a system you have to be sure that the new alternative you have to offer is capable of doing everything the old or traditional system is doing and even better, faster, cheaper. As rightly said by Peter Thiel — “A Great technology company should have proprietary technology in order of magnitude better than its nearest substitute” This is something new protocols like Conflux Network realized and decided to fix. Conflux network boasts of achieving higher transaction per second than the traditional financial system can achieve, Doing so without sacrificing decentralization and all the benefits that come with it.

Blockchain technology will thrive in regions with low or no existing infrastructures, which is why Africa is dubbed to be the haven where the world sees blockchain technology thriving the most. Hopefully creative and very useful DAPP’s would be built on top of blockchain protocols like Conflux Network, where people would see how useful and effective this application is in our daily lives and blockchain technology being just a rail that makes this possible to be achieved.

I put together a few remarkable Blockchain projects in Africa asides the usual exchanges and remittance just to show the extent to which this technology can impact our society positively.

Da Beers: A platform that uses blockchain technology to authenticate and track diamonds in South Africa. This is built to ensure its diamonds are authentic and conflict-free. The blockchain is used to provide a permanent, unchangeable record for every diamond from the process of it being mined till when it is sold. Da beers launched in 2018.

StudEx wildlife: Founded by the youngest son of the President of South Africa; Tumelo Ramaphosa. His passion for wildlife has been passed on to him from his grandfather who passed down the family livestock business from one generation to another. He used to help his mother deliver baby calves, these created a strong bond between the craft of his forefathers and him. StudEx is an online version of his family farm, built on the blockchain, to protect, conserve and care for wildlife through impact-focused capital. StudEx partnered with IBM and Cardona to use IoT to discourage illegal poaching through tracking the location of the animals, their heart rate, and other significant activities, all on-chain. This is to allow the animals to roam naturally by minimizing their contact with humans and using technology.

The government of Democratic Republic of Congo: Launched a scheme in the third quarter of 2018 to use blockchain technology to monitor the mining of Cobalt in its region. The aim was to ensure that cobalt which is used on producing lithium-ion batteries for cell phones are not being mined by children. A lot of companies are under pressure from consumers and investors to show that cobalt has passed through a supply chain free of rights abuse.

Sela labs: Founded by Chi Nnadi, grandson of the former mayor of Port Harcourt. Port Harcourt is in Nigeria, well known as the oil capital of Africa. Nnadi decided to leave his career at MTV to focus on solving the problem in Niger Delta. He then recognized that solving the problem did not necessarily need a scientific approach. Rather, it was a problem of information and capital traveling to the right source. This problem was most evident in an eighty-four million dollar spill settlement won by the village of Bodo from Shell in 2015, which most of the funds got “missing” before getting to the hands of the villagers. Sela is building a platform that allows investors, government, and donors looking to deploy capital into the region, utilize blockchain technology to track and measure those investments in Africa.

Pick n Pay: A Cape Town branch of Pick n Pay accepted bitcoin as a payment alternative for groceries and services. The initiative was developed in partnership with software payment provider Electrum and bitcoin exchange company Luno. Using the Luno app to scan a QR code and confirm the bitcoin transaction.

Blockchain technology is here to stay and make our lives easier just like the internet did when the world started connecting via the world wide web. The sooner we embrace it and look for useful scenarios that we can apply this technology, the sooner we will be able to experience freedom with no limitations on nationality, credit score, wealth, geographical location. Transactions and remittances will also become much cheaper. This technology could also be mapped into our traditional way of doing business to improve performance and increase accountability as well as security.

Together we can connect the world and eliminate exorbitant transaction fees and middlemen with blockchain technology.