One of the key characteristics of traditional finance is its inaccessibility. Surely people who work in finance won’t love to read that sentence, and some efforts have been made to make financial services and practices more accessible to the general public. The link we posted before is for ISO, the International Organization for Standardization. They are dedicated to establishing standards that will allow everyone to have access to the same things, for the sake of advancing equality.
They are the first to admit that two billion people worldwide are completely excluded from the financial system. That’s a little under a third of the global population. And what they mean is that these people are completely excluded from all banking and financial transactions. When we speak of finance, we are speaking of financial markets, which is something way more rarefied still.
Let’s look at one of the better known financial operations that go beyond day-to-day bank account usage: owning stock.
Only 56% of American citizens own stock. In most European countries, that number’s much lower. One third in the UK, and between 15 and 20% in the Netherlands or Italy.
If that’s the usage of financial services in the countries with the lowest percentages of unbanked and underbanked people in the world, you can imagine what the numbers will look like elsewhere.
So how can we improve upon this?
DeFi needs no one’s permission
The core promise of Decentralised Finance is that anyone should be able to access the financial services of their choice. Whether that means investing in assets that go well beyond traditional stocks and can include digital art or tokenised properties or signing futures contracts, the promise of DeFi is that all financial services that would formerly depend on an intermediary should be available to everyone with a smartphone.
And let us say this again: pretty much everyone is getting a smartphone. By January 2022, 84% of the world’s population had at least one smartphone on them. That’s up from 49.4% just six years ago, and there’s no indication that this is stopping.
When you are using DeFi, the security is provided by the technology, not by a governing institution. This means you don’t need anyone to approve your access to financial services or markets.
DeFi removes these barriers to access that institutions keep in place to maintain control over who can participate in the economy.
DeFi needs you to trust only you
One of the greater barriers to access for those new to the markets is that things change constantly. Fraud is a constant, and you need to know what you’re doing. Financial fraudsters have become celebrities and folk heroes. Classic movies have been made about how tricking investors and the markets is profitable and fun.
The consequences of these predatory practices, of course, can sometimes be quite dire.
DeFi, however, runs on the blockchain.
Of course we are not saying that fraud is impossible in DeFi. DeFi is, after all, about personal responsibility. You can make mistakes. You can be misled.
There is no technological remedy for that.
What DeFi does do is give you every single tool to always know exactly what you are doing. With DeFi, every transaction, every contract, every move, is recorded in an immutable ledger. No one can alter the information or the terms of a contract. Not you, not a bank, not a financial institution, no one. All pieces of information will always be available to you at all times, and no one will be able to renege on the deals they made.
In traditional finance, you give your funds over to someone you must trust, whether it’s a broker, a banker, an investor, or… someone. In DeFi, you don’t need to trust anyone. The system itself will ensure agreements are fulfilled.
DeFi is for everyone
The ultimate goal for DeFi is simple: everyone gets to use financial tools and services.
Everyone gets access to loans. Everyone gets access to savings. Everyone gets access to investment opportunities. Everyone gets access to making educated decisions about their own financial future.
Traditional banking and traditional institutions are not only uninterested in making this happen, they are actively raising barriers to democratizing access to this.
Fortunately, blockchain technology has given us the chance to take the future into our own hands.
Utrust is working to provide global, near-instant, payments at a trivial cost. This can only be done using the same principles that guide the DeFi pioneers.
