In the world of blockchain, the vast majority of decentralized finance news focuses on how this industry can further innovate financial technology, improving existing features and increasing the efficiency of the field as a whole. Yet, a function of DeFi that is commonly overlooked is its accessibility, and what that access could mean to the 1.7 billion unbanked adults around the world.
The vast majority of unbanked individuals across the globe simply do not have access to the correct documentation to start a bank account. This is especially the case in developed countries, where financial institutions often require a fixed home address to apply for a bank account, something that many people do not have.
In this article, we’ll be delving into the concept of banking the unbanked, revealing exactly how DeFi could be a powerful solution for financial onboarding, and a whole host of other financial functions.
How Does DeFi Provide Accessibility?
In a decentralized financial system, users access any financial services through the blockchain. This is the critical difference, as blockchain technology provides a decentralized network, the opposite of what current banking institutions use. Within DeFi, users are able to open financial wallets, which act as bank account equivalents.
The core difference between the process of opening a DeFi wallet and the practice of opening a bank account is documentation. Absolutely anyone that has access to the internet can instantly open a DeFi wallet in their name, making the process of getting a bank equivalent quick and easy. While the vast majority of the unbanked population don’t have the right documents to submit for a bank account, they can make a DeFi wallet and start depositing money right away.
From these digital wallets, DeFi users are able to execute a range of smart contracts to make payments or transfer money, granting them a range of similar financial functions. One difference is that in the world of decentralized finance, cryptocurrency is the active money medium, with leading cryptos like Blockchain or Ethereum being the main financial coins.
Considering how easy it can be to create a bank account within the DeFi network, this new system could empower millions of unbanked individuals around the globe, helping them to find a more stable form of financial management.
DeFi Offers An Onward Progression
Alongside simply storing capital within digital wallets, the world of DeFi is rapidly growing and increasing the number of functions that it could offer any user. There are now over 4,000 decentralized applications, each of which offers further services to users. Some of these apps might be for investing money; some might be for security, some might be for gaming, and so onward.
With the ever-expanding number of dApps that users can connect their digital wallet to, the extent to which the DeFi environment becomes a useful tool grows further. With this current projection of upward growth, we’re likely going to see even more dApps in the coming years, bringing more financial functions to those that are banking with DeFi.
The vast majority of dApps are run on the Ethereum network, with this platform seeing nearly 70,000 active users. With this in mind, it’s likely that ETH will be the chosen cryptocurrency of note, with the ease of scalability and fast transaction speed of this network being the most effective for blockchain payments.
Beyond Just Banking with DeFi
Alongside just holding money and participating with dApplications, a range of companies have started to turn their sights on DeFi and what could be possible with these decentralized services. Everything from healthcare companies and gaming companies to insurance businesses and more are starting to spring up in the world of DeFi. With each arrival, the range of opportunities and the actions that users banking with DeFi can execute further increase, making this accessible system even more valuable.
One of these said companies, known as SOMA.finance, aims to allow anyone using DeFi to trade and list a range of digital assets. Going beyond just crypto assets, they also allow users to trade and list tokenized equities, NFTs, STOs, and even ETFs through their platform. As a globally compliant multi-asset decentralized exchange, they provide a central marketplace where anyone using DeFi can go to trade their assets.
Without users having to go through centralized systems in order to trade their digital assets, they will be able to save a great deal of capital, boost their investments, and ensure that they are accessing a financial trading system with no room for market manipulation. As a multi-asset platform, they effectively open up the world of DeFi trading, going far beyond the initial cryptocurrency that DeFi wallets entail and allowing anyone using these services to actively trade whatever digital currency they want.
SOMA.finance is a fantastic example of how individual projects within the world of DeFi are actively fighting to make this system even more lucrative than what it already is. With companies like this in a range of different industries, the offer pool of what users can achieve with DeFi is continually expanding, further bringing utility to those looking for an accessible and high-impact financial system.
With millions of people left around the globe without a feasible method of accessing centralized finance, DeFi poses as the perfect solution. As an accessible financial system that allows absolutely anyone to start a DeFi wallet, this would provide a platform that unbanked individuals could turn to.
Instead of facing layers of documentation that prevent unbanked individuals from getting an account, the world of DeFi is significantly more accessible, helping them to get started with their own financial journey. Alongside just securing an account, the ongoing developments within the world of DeFi have made this financial system even more full of advantages and potential.
Over the next few years, we’re likely to see the true capabilities of DeFi further flourish, bringing utility to the unbanked, and absolutely anyone that’s looking for a decentralized, applicable, and feature-rich financial system.