{"id":218703,"date":"2021-04-04T10:17:00","date_gmt":"2021-04-04T07:17:00","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/defi-ing-the-odds-why-defi-could-rebuild-trust-in-financial-services\/"},"modified":"2021-04-04T10:17:00","modified_gmt":"2021-04-04T07:17:00","slug":"defi-ing-the-odds-why-defi-could-rebuild-trust-in-financial-services","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/defi-ing-the-odds-why-defi-could-rebuild-trust-in-financial-services\/","title":{"rendered":"# DeFi-ing the odds: Why DeFi could rebuild trust in financial services"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_85 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a4175ff85d52\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a4175ff85d52\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/defi-ing-the-odds-why-defi-could-rebuild-trust-in-financial-services\/#With_a_digital-first_generation_DeFi_will_become_the_default\" >With a digital-first generation, DeFi will become the default<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/buradabiliyorum.com\/en\/defi-ing-the-odds-why-defi-could-rebuild-trust-in-financial-services\/#As_DeFi_takes_off_expect_legacy_institutions_to_fight_back\" >As DeFi takes off, expect legacy institutions to fight back<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/buradabiliyorum.com\/en\/defi-ing-the-odds-why-defi-could-rebuild-trust-in-financial-services\/#The_path_ahead_is_promising_%E2%80%94_but_not_without_its_bumps\" >The path ahead is promising \u2014 but not without its bumps<\/a><\/li><\/ul><\/nav><\/div>\n<p>&#8220;<strong># DeFi-ing the odds: Why DeFi could rebuild trust in financial services <\/strong>&#8221;<br \/>\n<img decoding=\"async\" src=\"https:\/\/images.cointelegraph.com\/images\/840_aHR0cHM6Ly9zMy5jb2ludGVsZWdyYXBoLmNvbS91cGxvYWRzLzIwMjEtMDMvODRjYjIxYjYtZjdiNi00OTE1LWJhYWYtZTVjM2ZjMjRjOTkxLmpwZw==.jpg\" \/><\/p>\n<div class=\"post-content\" data-v-5a136f3a>To function effectively, society has long depended on people having faith in their institutions. Thanks to the COVID-19 pandemic and wide-ranging failures of leadership, that faith has been tested like never before.<\/p>\n<p>Nowhere is the decline in trust more evident than in the financial services sector. In its 2021<a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.edelman.com\/trust\/2021-trust-barometer\"> Trust Barometer<\/a>, Edelman <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.edelman.com\/sites\/g\/files\/aatuss191\/files\/2021-01\/2021-edelman-trust-barometer.pdf\">found<\/a> that only 53% of American respondents said they trusted those in the U.S. to &#8220;do what is right&#8221; \u2014 down 5% from its 2020 survey. You can see this in the battle between Main Street and Wall Street, which played out in January\u2019s <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/game\/\" data-internallinksmanager029f6b8e52c=\"7\" title=\"Game\" target=\"_blank\" rel=\"noopener\">Game<\/a>Stop rally. More than just another \u201c<a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.forbes.com\/sites\/simonmoore\/2021\/01\/30\/two-major-surprises-from-the-gamestop-short-squeeze\/\">short squeeze<\/a>,\u201d the rally highlighted the fact that many younger investors simply don\u2019t believe in financial institutions.<\/p>\n<p><strong><em>Related: <\/em><\/strong><strong><em>r\/Wallstreetbets vs. Wall Street: A prelude to DeFi bursting onto the scene?<\/em><\/strong><\/p>\n<p>Trending away from institutional authority is also evident in the explosive growth of decentralized finance, or DeFi. By using decentralized <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/download-scripts-themes-apps\/\" data-internallinksmanager029f6b8e52c=\"9\" title=\"Download Scripts &amp; Themes &amp; Apps\" target=\"_blank\" rel=\"noopener\">app<\/a>lications on the blockchain, DeFi allows individuals to lend or borrow funds, trade coins and earn interest on savings. Their transactions are governed by smart contracts, embedded in the software; no bank, brokerage or exchange is required.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"With_a_digital-first_generation_DeFi_will_become_the_default\"><\/span>With a digital-first generation, DeFi will become the default<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>To illustrate how fast DeFi has taken off, examine the total value locked, or TVL, being poured into the DeFi sector. TVL is the best way of charting the success of DeFi, as smart contracts usually require a counterparty to post collateral for any transaction. As of mid-March, almost $59 billion was <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/debank.com\/ranking\/locked_value?chart_date=MAX\">locked<\/a> into DeFi. A year earlier, that figure stood at around $500 million.<\/p>\n<p>The overall crypto market \u2014 driven by Bitcoin (BTC) \u2014 is now worth well over $1 trillion, so there\u2019s a long way to go before DeFi becomes headline <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">news<\/a>. Though remember: It took Bitcoin nearly 10 years before institutional investors really started to buy in \u2014 and it seems that it will take half that time for DeFi to achieve similar penetration.<\/p>\n<p><strong><em>Related: <\/em><\/strong><strong><em>Why institutions suddenly give a damn about Bitcoin<\/em><\/strong><\/p>\n<p>Why? Because younger investors \u2014 like the GameStop traders \u2014 understand the concept of digital scarcity, embracing the fact that non-physical assets have value. That\u2019s why they\u2019re buying up nonfungible tokens as a way to trade digital properties. The best-known example of the NFT phenomenon was the Christie\u2019s auction in March of a digital collage by artist Beeple \u2014 purchased for almost $70 million using cryptocurrency.<\/p>\n<p><strong><em>Related: <\/em><\/strong><strong><em>Actionists reinventing art: As it ever was, so shall it ever be (even in crypto)<\/em><\/strong><\/p>\n<p>What has been a trickle of crypto activity promises to become a torrent, once the bulk of Baby Boomers retire. The epochal event, now underway, represents one of the greatest transfers of wealth ever. According to \u201cBig Four\u201d audit firm PwC, an estimated $59 trillion in wealth will <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.pnc.com\/en\/about-pnc\/topics\/pnc-pov\/economy\/wealth-transfer.html\">move<\/a> from retiring Boomers to their digital-native beneficiaries by 2061.<\/p>\n<p>It is this new generation that will be looking for ways to invest their inheritance \u2014 and choosing the systems and platforms in which to place their trust. Given the choice, Millennials and Gen Zs will always choose the investment option that\u2019s cheaper, more accessible and available 24\/7.<\/p>\n<p><strong><em>Related: <\/em><\/strong><strong><em>Crypto could save millennials from the economy that failed them<\/em><\/strong><\/p>\n<h2><span class=\"ez-toc-section\" id=\"As_DeFi_takes_off_expect_legacy_institutions_to_fight_back\"><\/span>As DeFi takes off, expect legacy institutions to fight back<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Of course, banks being banks, you can expect to see them \u2014 along with other legacy institutions \u2014 fighting hard to defend their turf. They know that to remain competitive, they\u2019ll need to increase service hours, decrease settlement times and boost user functionality.<\/p>\n<p>Already they\u2019re starting to integrate smart contracts and other DeFi technologies into existing platforms \u2014 both to increase efficacy and to keep up with market demand for more transparency and customer privacy. In a February white paper, released by the Depository Trust &amp; Clearing Corporation, the DTCC proposed shortening the settlement cycle for U.S. equities from two business days to one.<\/p>\n<p>Even then, the planned implementation of the DTCC plan could take two years \u2014 and still lag behind the instantaneousness of crypto. In a world that\u2019s moving rapidly toward a 24\/7 model, security issuers that stick to industry laggards will soon be left behind.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"The_path_ahead_is_promising_%E2%80%94_but_not_without_its_bumps\"><\/span>The path ahead is promising \u2014 but not without its bumps<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>While the <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/technology\/\" data-internallinksmanager029f6b8e52c=\"4\" title=\"Technology\" target=\"_blank\" rel=\"noopener\">technology<\/a> for DeFi is advancing quickly, it will take time for the capabilities to get where they need to be for broad-scale adoption. The network fees required to trade on decentralized trading exchanges such as Uniswap are still high (though that\u2019s expected to come down over time).<\/p>\n<p>There\u2019s no denying the potential of being able to buy or trade digital assets 24 hours a day, with im<a href=\"https:\/\/buradabiliyorum.com\/en\/category\/social-mediaa\/\" data-internallinksmanager029f6b8e52c=\"1\" title=\"Social Media\" target=\"_blank\" rel=\"noopener\">media<\/a>te delivery, or to borrow on a peer-to-peer level \u2014 and dictate your own terms. <\/p>\n<p>There are still some 1.7 billion people who are <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/globalfindex.worldbank.org\/sites\/globalfindex\/files\/chapters\/2017%20Findex%20full%20report_chapter2.pdf\">considered<\/a> \u201cunbanked\u201d \u2014 and DeFi holds the promise of offering any individual with an internet connection and mobile phone a full array of banking services.<\/p>\n<p class=\"post-content__disclaimer\"><em>This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.<\/em><\/p>\n<p class=\"post-content__disclaimer\"><em>The views, thoughts and opinions expressed here are the author\u2019s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.<\/em><\/p>\n<div>\n<div style=\"background: rgb(239, 239, 239); border: 1px solid rgb(204, 204, 204); padding: 10px;\"><strong>Mitchell Demeter<\/strong> is a serial entrepreneur who launched the world\u2019s first Bitcoin ATM in Vancouver, Canada back in 2013. Mitchell now serves as president of Netcoins, a trading platform that is aimed at making it easier to buy, sell and understand cryptocurrency. He has been featured in publications such as Wired, Time, HuffPost and Forbes and contributes regularly to Fast Company and Entrepreneur.<\/div>\n<\/div>\n<p><template data-name=\"subscription_form\" data-type=\"defi_newsletter\"><\/template><\/div>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. 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Thanks to the COVID-19 pandemic and wide-ranging failures of leadership, that faith has been tested like never before. Nowhere is the decline in trust more evident than in&#8230;<\/p>\n","protected":false},"author":1,"featured_media":218704,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/images.cointelegraph.com\/images\/1200_aHR0cHM6Ly9zMy5jb2ludGVsZWdyYXBoLmNvbS91cGxvYWRzLzIwMjEtMDMvODRjYjIxYjYtZjdiNi00OTE1LWJhYWYtZTVjM2ZjMjRjOTkxLmpwZw==.jpg","fifu_image_alt":"","footnotes":""},"categories":[1],"tags":[74894,74983,75239,74868,74891,75238,75356,74935,4965],"class_list":["post-218703","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-blockchain","tag-decentralization","tag-decentralized-finance","tag-defi","tag-ethereum","tag-financial-services","tag-future-of-money","tag-nonfungible-tokens","tag-technology"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/218703","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=218703"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/218703\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/218704"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=218703"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=218703"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=218703"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}