Does the banking sector really seem to be lagging behind? Let’s dive in and explore the current transition from banks to crypto!
To maintain market share in a mature industry, banks have a history of being notoriously anti-competitive and unwilling to allow customers to share or integrate their information with other financial services companies. However, banks usually benefit more than consumers. This has led to multiple shortcomings in traditional banking institutions.
- Fragmented landscape of banking systems that do not communicate effectively with each other.
- Ineffective sharing of consumers’ past financial information, limiting access to credit.
- An adverse environment that has slowed down financial innovation.
And that’s where decentralized finance comes into play! DeFi protocols provide their services using permissionless, transparent and interoperable open-source software systems and secure crypto wallets. As a result, dApps can innovate on each other without any permissions or risk of losing access to critical infrastructure layers, while users are free to move their resources and data across the ecosystem.
DeFi has only recently emerged, but the industry has quickly matured to facilitate several fundamental banking services, including stablecoins, lending and borrowing, exchanges, derivatives, data, asset management, and others.
Decentralized lending solutions, including multiple crypto wallets, compete with bank checks and savings accounts by allowing users to freely store money and access higher interest rates. DEXs and private cryptocurrency wallets connect liquidity networks, making trading as easy as sending an email over the internet. DeFi allows anyone to offer these services to anyone with an internet connection anywhere in the world.
Decentralization is the third stage of growth for the crypto economy. It is also the next phase of Fintech innovation. It can make banking as accessible as the internet has made information. DeFi seeks to transform the way people build trust on the Internet and provide Internet users with a new banking alternative.
DeFi users have grown six times to 3.5 million to date and will soon approach the scale of leading banks if this growth rate can continue.
DeFi’s total value exceeds $170 billion, equivalent to 1% of all commercial bank deposits in the United States, making it the 18th largest bank in the United States by assets.
With these assets, DeFi is on track to generate $5 billion in annual revenue. The global financial system generates $5.5 trillion in revenue by servicing $300 trillion in assets, while a single US digital wallet user could be worth $20,000, presenting a major opportunity for decentralized finance.
Given the improved rates and user experiences, it is now clear that new Web3 users who earn tokens through games and NFTs prefer to store these tokens in decentralized protocols and secure crypto wallets through TradFi banks, increasing the number of DeFi users.
Let’s see how DeFi offers a paradigm shift. We will compare traditional banks with the recently launched ones Crypto walletDefexa.
Customers – Can a resident of China easily open a bank account in Australia? Or is it possible for a US citizen to seamlessly issue a credit card at Finland Bank? Sure, but the process is really complicated and involves tedious paperwork. TradFi is limited to specific regions and privileged customer preferences. Meanwhile, DeFi is distinguished by non-discriminatory equal access for anyone with an internet connection. With the recent launch of Defexa Wallet, their Crypto Wallet mobile app is already available worldwide.
Asset Custody – With banks, you hand over your assets to institutions or a custodian. dApps allow users to store assets directly or in non-custodial smart contracts. In the case of Defexa Wallet, users are the sole owners of their assets as it is a non-custodial wallet. digital crypto wallet.
Centralization – Banks are centralized institutions regulated by governments and other authorities. DeFi, on the other hand, is decentralized and runs on a peer-to-peer network with no intermediaries. Defexa acts as a decentralized and non-custodial crypto walletremoving all third party risks while interacting with the Defexa Wallet app.
Security – TradFi has security measures and insurance in place to protect clients’ assets. Nevertheless, banks have the right to freeze your account and the money in it. Decentralized protocols, on the other hand, secure your data and prevent unauthorized access to your company assets. If you keep your seed phrase safe, you have nothing to worry about. In addition, during development, Defexa Digital wallet placed a high priority on user security and used AppSec technology to provide bank-level security.
interoperability – While TradFi remains extremely traditional, DeFi combines crypto and fiat, attracting even more new users for innovative and decentralized finance. Defexa Wallet not only supports secure storage and convenient management of over 100 tokens, but simplifies crypto entry with a built-in Fiat On-ramp feature. In addition, Defexa will soon introduce a global bank card that supports cryptocurrency purchases.
Accessibility – Banks require users to have a bank account and often have strict requirements for opening one. Cryptocurrencies, on the other hand, are more accessible and can be bought and sold by anyone with an internet connection. Of Defexa wallet, users remain anonymous. As a decentralized wallet, Defexa does not require KYC. Creating an account takes no more than two minutes.
In general, banks and cryptocurrencies represent two different approaches to financing, each with their own advantages and disadvantages. Banks offer stability and established regulation, while cryptocurrencies offer greater accessibility and individual control over assets. However, innovation never stops and we are currently witnessing a financial revolution! The Fintech industry is constantly changing and evolving as we currently see a massive influx of new ideas and technology that will shape the future of banking.
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*This article is paid for because Cryptonomist did not write the article or test the platform.