The year 2024 proved to be a challenging period for the #cryptocurrency industry. (I propose beginning with an understatement!)
The current inquiry within the #DeFi sector pertains to the potential widespread adoption of Decentralised Finance in the year 2024.
DeFi, with its emphasis on governance driven by community participation and decentralised technology, has the potential to significantly transform the finance sector and restore authority to individuals. However, it remains uncertain if widespread acceptance will occur or if the sector is now too impaired to facilitate such a development.
Corruption may be characterised as a pervasive societal issue with detrimental consequences. Introduce the remedy
The current year has witnessed a series of significant failures, which cannot be attributed solely to chance or fortuitous convergence of unique circumstances.
Contrarily, the majority of these occurrences may be attributed to fraudulent activities, manipulative tactics, and individuals with malicious intentions, without any additional complexities.
The general consensus among individuals was that cryptocurrency was intended to eliminate these malicious individuals. However, it appears that certain individuals of significant prominence were excessively remunerated, and the inclination towards avarice had a deleterious tendency to influence human conduct.
The prominence of this observation was particularly evident inside the cryptocurrency domain throughout the current year. However, it is important to acknowledge that the developments observed in the cryptocurrency industry this year can be primarily attributed to the phenomenon of centralization, encompassing the consolidation of authority, influence, and financial resources. The field of centralised finance (CeFi) appears to possess similar characteristics to its predecessor, traditional finance (TradFi), in terms of its controversial nature.
One notable outcome of this situation is that decentralised finance (DeFi), referring to protocols that operate in a truly distributed manner, emerged mostly unaffected.
Traditional finance (TradFi) has consistently posed challenges and issues.
Despite the longstanding imposition of a comprehensive set of laws and regulations on Traditional Finance (TradFi) institutions, accompanied by substantial fines and penalties for non-compliance, there is a considerable number of institutions that persist in violating these legal provisions.
One may be inclined to assume that the imposition of substantial fines, often amounting to millions or even billions of dollars, would effectively deter such misconduct. However, regrettably, this is not the case.
In spite of the imposition of substantial fines on financial institutions for violations of anti-money laundering regulations, manipulation of foreign exchange rates, and the mis-selling of financial products, the monetary penalties incurred remain inconsequential relative to the considerable profits derived from illicit practises.
Consequently, it might be said that these financial penalties can be perceived as a mere expenditure inherent to conducting corporate activities inside the Wall Street domain, with the government ensuring its share of the proceeds.
Corruption appears to be a persistent issue within the traditional financial sector (TradFi), for which an effective remedy has yet to be discovered. Similarly, the realm of centralised finance (CeFi) does not present any novel approaches to address this problem. If individuals were to choose to cease placing faith in the corrupt banking system and instead choose for decentralised finance (DeFi).
However, despite widespread awareness that the financial system, particularly the banking establishment, is fundamentally corrupt, a significant portion of the population continues to place their confidence in these traditional institutions, despite their demonstrated lack of integrity in managing financial assets.
Is the notion of a substantial DeFi revolution only a speculative fantasy, or will there genuinely emerge a widespread movement of individuals seeking to entirely circumvent the traditional financial system?
The primary underlying factor driving the continued use of banks, although widespread awareness of their historical performance, is the development of user-friendly financial instruments that possess a high degree of comprehensibility among the general populace.
The TradFi industry has effectively implemented several user-friendly technologies, including as contactless cards, Apple and Google Pay, internet banking, and intuitive mobile applications. These advancements have significantly facilitated the adoption and adaptation of traditional financial services by individuals, including those with less technical expertise.
DeFi protocols should pay attention to this aspect. If the development of user-friendly and streamlined financial services is achieved, there is potential for our industry to experience a growth in market share.
The persuasive rationale supporting the adoption of decentralised finance (DeFi)
The increasing dissatisfaction among individuals towards the conventional financial system and its centralised nature has led to the emergence of DeFi. Rooted in the principles of decentralisation and empowerment, DeFi aims to establish a financial system that is characterised by openness, transparency, and inclusivity. Unlike the existing structure, which is dominated by a handful of prominent institutions, DeFi endeavours to create a system that is accessible and available to all individuals.
Within a decentralised finance (DeFi) ecosystem, the community assumes authority and democratic processes are employed to reach choices. This presents a clear juxtaposition to the centralised and sometimes opaque characteristics of conventional finance, when a select few influential individuals wield decision-making authority that impacts the whole population.
Decentralised Finance (DeFi) has several technological benefits in comparison to conventional financial systems. Its decentralised design enhances security and resilience by eliminating a single point of failure.
Additionally, it facilitates expedited and streamlined transactions, hence resulting in reduced costs. The aforementioned advantages are especially attractive to individuals who have been excluded from the conventional financial system, namely those who lack access to banking services or have limited access to them.
Moreover, it may be argued that DeFi does not necessarily contribute to an individual's sense of happiness due to the absence of tangible ownership. Additionally, it can be contended that DeFi does not bestow onto the government an unprecedented level of authority to confiscate assets or impose restrictions on withdrawals. Furthermore, it can be posited that DeFi does not engage in censorship based on divergent ideological perspectives.
The rise of authoritarian measures by governments worldwide in 2024 might be attributed to their perceived impunity, as both traditional financial institutions (TradFi) and centralised finance (CeFi) crypto exchanges enabled them to exercise unrestrained authority. The absence of counterarguments can be attributed to the inherent authority vested in governmental bodies.
Decentralised finance (DeFi) exhibits a notable disregard for governmental influence.
The functionality is unaffected by the government's authorization or prohibition. Many individuals contend that in a society where even the common person has become aware of the elites' apparent determination to enforce authoritarian dominance over all facets of existence, decentralised finance (DeFi) will ultimately emerge as the prevailing system.
The enduring nature of freedom is seen in its ability to persist and regenerate, even in the face of seemingly insurmountable challenges.
The phenomenon of Stockholm Syndrome in societies with traditional financial systems.
These reasons may be considered persuasive in favour of decentralised finance (DeFi) in comparison to the conventional financial system. The present inquiry pertains to the reasons behind the relatively low adoption rates of cryptocurrency and the considerably lower participation rates in decentralised finance (DeFi).
Despite the highly tempting proposition of DeFi, which promises a financial system characterised by openness, transparency, and accessibility, there is a notable reluctance among individuals to embrace its adoption.
Is the primary reason for this phenomenon primarily attributed to the intricate nature, limited user-friendliness, and potential security vulnerabilities of decentralised finance (DeFi)? Alternatively, could it be that a significant portion of individuals remain uninformed about DeFi, or are we as a society still clinging to an optimistic belief that the existing financial system will resolve all issues?
DeFi, undoubtedly, remains a very nascent and unknown notion for a significant portion of individuals. Although concepts such as Permissionless blockchain networks and smart contracts are highly appealing to individuals knowledgeable in Decentralised Finance (DeFi), it is important to acknowledge that not everyone possesses a comprehensive understanding of these words, let alone the fundamental issues inside current financial systems. The lack of comprehension has frequently been associated with a lack of faith in a certain subject matter.
However, a significant transformation anticipated in the upcoming year pertains to the alteration in vocabulary and discourse around Decentralised Finance (DeFi) in contrast to Centralised Finance (CeFi)/Traditional Finance (TradFi).
The ongoing discourse is now taking place due to a combination of factors, including the adverse impact of inflation on household incomes and the decline of traditional media outlets. Consequently, an increasing number of individuals are seeking out independent and alternative sources to obtain their news and information.
The ongoing dialogue is gradually taking place inside this particular framework, and it is anticipated that this development will have a transformative impact on the decentralised finance (DeFi) sector.
The potential benefits and drawbacks associated with Wall Street's involvement in the decentralised finance (DeFi) industry.
Undoubtedly, the conventional banking sector has been cognizant of the proliferation of DeFi. Numerous established entities are increasingly acknowledging the significance of DeFi and are actively investigating avenues to integrate it within their existing frameworks.
This phenomenon serves as evidence of the efficacy and promise of decentralised finance (DeFi), as it is increasingly garnering the interest of even the most established and doubtful participants.
However, it is uncommon for established institutions to engage in genuine and sincere participation.
One of the primary challenges confronting the sector, and perhaps the global economy, is to the escalating risk posed by Central Bank Digital Currencies.
Central Bank Digital Currencies (CBDCs) refer to electronic renditions of domestic currencies that are both issued and regulated by central banking authorities. What potential complications or negative outcomes could arise?
Central Bank Digital Currencies (CBDCs) and Decentralised Finance (DeFi) represent diametrically opposed concepts. Centralization is a prominent characteristic of these entities, as they are governed by a limited number of persons. Moreover, they exhibit a deficiency in terms of openness and accountability when compared to decentralised finance (DeFi) systems. Furthermore, these entities present a significant risk to the decentralised structure of the DeFi landscape, as they have the capacity to exercise influence and establish control over the DeFi ecosystem.
Consider, for a moment, a programmed central bank digital currency (CBDC) that effectively restricts individuals from engaging in bitcoin transactions or any other kind of financial exchange, particularly if they have been labelled as persona-non-gratia by the governing authorities. The current state of decentralised finance (DeFi) is facing a significant challenge due to the issue of customers encountering difficulties in the process of on-ramping.
If one holds the belief that the aforementioned statement is only a speculative conspiracy idea, it would be prudent to examine the statements made by the Deputy Managing Director of the International Monetary Fund.
However, the growing interest of institutions and governments in the potential of blockchain technology may result in a heightened attention towards genuinely decentralised cryptocurrencies, such as Bitcoin.
To effectively promote the concept to a wide audience, there is a growing possibility that individuals will develop a heightened awareness of the opposing viewpoints regarding Central Bank Digital Currencies (CBDCs) as a result of being exposed to news outlets that advocate for the merits of digital currencies. It is worth recalling the previous narrative that portrayed Bitcoin solely as a tool utilised by terrorists and criminals.
In the event that governments opt to substitute physical currency with a Central Bank Digital Currency (CBDC), it is plausible that a substantial public opposition may arise, driven by newfound apprehensions on matters like as privacy and security.
Individuals who harbour a sense of scepticism against governmental institutions, however have not yet ventured into the realm of cryptocurrency, may potentially contribute to the growing population of hodlers. These individuals want an alternative that operates independently from the influence of the financial elites.
As an initial measure, it is plausible that an increasing number of individuals would gravitate towards decentralised finance (DeFi) as a prospective alternative to the conventional financial system, driven by a growing disillusionment with its practises. This inclination arises from the desire to avoid exploitation by financial institutions. It would be highly desirable if the excessive pride exhibited by the centralised traditional financial (TradFi) sector resulted in a significant backlash, leading to a complete abandonment of its usage by the general population.
The growth trajectory of DeFi is expected to persist.
In spite of a volatile period for cryptocurrencies, the year 2023 has consistently shown that decentralised finance (DeFi) initiatives, which adhere to the core principles that first attracted early adopters, had the resilience and capacity to endure and prosper.
This year has presented some favourable developments for the future of cryptocurrency, serving as a catalyst for those who were previously captivated by pursuing substantial returns without contributing significant value or substance to the market.
Abruptly, discussions pertaining to 1000% returns on Reddit have ceased, being supplanted by an incessant influx of narratives recounting the unfortunate depletion of individuals' entire financial reserves in one of the notable market downturns of the year.
It may be contended that the year 2023 marked a significant period of development for those involved in the cryptocurrency industry during their adolescent years. Furthermore, it is plausible to anticipate that the year 2024 may serve as a highly anticipated phase of further advancement and maturity.
Constructing a pathway towards resolution
As the decentralised finance (DeFi) ecosystem progresses, a growing number of inventive initiatives and applications are being constructed atop this framework.
The potential of decentralised finance (DeFi) encompasses a wide range of applications, including stablecoins, decentralised exchanges, lending and borrowing platforms, among others. These possibilities are characterised by their extensive scope and nearly boundless nature.
Undoubtedly, our resolve lies in ensuring that Bumper assumes a pivotal position in expediting the widespread acceptance of DeFi as a viable substitute for the morally compromised financial framework.
