The world of cryptocurrencies is certainly exciting and revolutionary, especially for the possibilities that this new virtual money can offer in terms of investments, trading, online purchases. At the same time, however, having been born without any kind of control, cryptocurrencies are often invested even for obscure purposes in the black and illegal market present on the Deep Web, such as the trading of weapons or even worse, as they guarantee that the transaction takes place. in a completely anonymous form.
The sender and recipient do not have a name and surname, but everything that appears on the outside is just a series of numbers. For them to be truly considered a valid alternative in international markets alongside traditional currencies, they will certainly have to abandon their decentralization and accept regulations and controls on their use. Therefore, to optimize and perhaps even limit or reduce some of their functions, to prevent them from being used for illegal purposes. The Cardano Exchange popularity has sparked a huge debate, which is still ongoing.
What problems does Defi try to solve?
- Some people are not allowed to open a bank account or use financial services.
- Lack of access to financial services can prevent people from being hired.
- Governments and centralized institutions can decide to close the markets at any time.
- The opening hours of banks and financial markets are limited to the working hours of a certain time zone.
- Money transfers can take days.
- Financial services have costs to compensate for the various intermediaries involved.
- Many of these problems are particularly acute in countries with political instability or high inflation.
Furthermore, the open and distributed nature of the decentralized financial ecosystem could also pose problems for existing financial regulation. Current laws were created based on the idea of separate financial jurisdictions, each with its listed rules.
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Defi’s scope of borderless transactions presents problems for this type of regulation, which will need to be revisited.
The importance of the blockchain
Most Defi projects run on the blockchain or similarsystems. It is one of the cornerstones of this movement and group of innovations in the world. The blockchain and the algorithms that govern it guarantee the possibility of having safe exchanges without institutions in the way. It is worth remembering that the blockchain is also useful because it sometimes allows you to trace different transactions and also offers a certain level of transparency.