Let’s be real though, TradFi is not working for us. Miserably. We’re talking about an industry that ought to be the foundation of our economy. Rather, it unfortunately ends up a confusing web of charges, time, and opacity. I understand that this will be unpopular with traditional finance. I actually think onchain solutions — rooted in the principles of blockchain technology and decentralization — are a real alternative.
TradFi Slows Down Business Progress
Think about this: you're an entrepreneur in Accra, like many I grew up around. You have the most innovative, fantastic new concept imaginable—you know, the one that’s supposed to change everything—but you can’t raise any money to launch it. Getting a loan approved through a traditional bank? Not a chance. Mountainous documentation requirements, sky-high interest rates, and an application process that sometimes takes half a year or more. That’s enough to snuff out any potential startup before it even gets the chance to exhale. This is not merely a nuisance, it is economic strangulation.
Now, picture being able to access these decentralized lending platforms! Here, your creditworthiness is calculated based on your on-chain activity and reputation, instead of an arbitrary credit score. Now picture getting that funding in just hours instead of months. That's the power of onchain finance.
High Fees Rob Economic Opportunities
Remittances. A lifeline for families across the globe. TradFi just bleeds them dry with ridiculous fees. Western Union, MoneyGram – you’re already way ahead of me. Sending money home shouldn’t be so expensive. It's morally wrong.
Onchain solutions offer a radically different approach. With stablecoins and decentralized exchanges, you could send money across borders for a few basis points of fees and settle in near-instant time. Consider what kind of damage that does to the families, particularly those who are already living month-to-month. It's not just about saving a few dollars; it's about economic empowerment.
Opacity Hides Corruption And Manipulation
It’s a word that’s very often used in the financial world, but TradFi is extremely opaque. Hidden fees, opaque financial instruments, and a complete lack of accountability have become standard fare. It’s a system that has played historically into the hands of corruption.
Blockchain, by nature, is transparent. Similar to cash-based transactions, every transaction is recorded on a public ledger, which makes it significantly more difficult to conceal illegal activity. Even given these flaws, it’s a hugely positive move in the right direction. It helps users to hold developers accountable by tracking how the money is being spent and if it’s being spent appropriately.
Now, before you get too deep into the idea that onchain finance is a pie-in-the-sky utopian vision, let’s be clear. It's not a silver bullet. There are tangible dangers as well, particularly in the Wild West of unregulated DeFi.
- Borderless Transactions Boost Global Trade
- Fractional Ownership Opens New Markets
- Transparency Builds Trust And Accountability
- Programmability Enables New Instruments
- Decentralized Lending Empowers Entrepreneurs
- Lower Fees Unlock Economic Potential
- Increased Access To Capital For All
Is Onchain Finance A Utopia?
Scams are rampant. Rug pulls are all too common. The absence of consumer protection should raise alarm bells. We’ve listened to the nightmare stories of everyone who lost their complete life savings to some sketchy DeFi project. That's unacceptable.
We need responsible regulation. What we really need are governance frameworks that proactively protect users, while still leaving room for innovation. We must change that to ensure that onchain finance works for all of us and that it isn’t the province of the nerdy rich kids.
While BlackRock’s engagement is something to be greeted as a good first step, it certainly serves as a canary in the coal mine. Will they help us produce the optimistic, decentralized future we hope for? Or will they just rehash the same TradFi system we’ve become accustomed to with better technology?
The future of finance isn’t about wiping TradFi off the face of the earth. It’s not an either/or proposition, but rather about developing a publicly-available hybrid system that marries the two. A system that is smarter, fairer, and open to all. A more humane system that works for people and businesses, instead of one that takes advantage of them.
Building A Better Financial Future
Tokenized real-world assets (RWAs) such as real estate, bonds, and equities are essential. In doing so, they span the landscape from the analogue and legacy to the automated and decentralized. Imagine investing in a fraction of a rental property in another country, all with a few clicks on your phone. Parties like Libre Capital are already practicing it, and already with Ethereum. That's the power of onchain finance.
Bear in mind, this isn’t all about the bucks. It’s a much deeper discussion in terms of building a more equitable and more just financial system, frankly, for everybody.
It's time to demand better. Now is the time to realize the promise of onchain finance. Now is the moment to shape a financial system that truly serves us all. We can't afford to wait. The future of finance is now.
It's time to demand better. It's time to embrace the potential of onchain finance. It's time to build a financial future that works for all of us. We can't afford to wait. The future of finance is now.
