Fintechs, Bitcoin and DeFi: the challenges for a new financial market

One of the main conclusions was that, if that happened, it would be impossible for any government to reverse the process without using some form of restriction for that community, such as blocking internet access or making Bitcoin trading illegal and arresting anyone involved in this activity. .

Since then, this market has developed a lot. Today, clearly, what used to be a set of solutions around Bitcoin has become a much more complete and complex ecosystem. And among these solutions, a few years ago, the structures that are known as DeFi emerged.

An important point of comparison is with the fintech movement. They came to improve the solutions already present in the market – that is, to do what banks and other financial agents were already doing, but in a more customer-focused, direct, cheap way, among other characteristics. To do so, they used various existing technologies, but they were – and are – playing the game as it is.

Fintechs do not propose drastic system change solutions. They fall within the existing regulations of the various countries and many, as they grow, even transform themselves into proper and regulated banks.

Architecture created from scratch
In the case of DeFi, the focus is to create a new global financial architecture, in which local rules, intermediaries or trading logic are defined by software and work in a direct, distributed and transparent way for everyone who wants to access it.

There is no regulator, regulated entity, geographic base, usage restrictions, know your costumer, anti-money laundering, compliance and all the current legal apparatus involving the local or global architecture of the financial market.

The protocols, in general developed together with the Ethereum network, have their own rules that are transparent to everyone who wants to use them. It is, therefore, inclusive, fast, transparent, efficient and effective.

As an example, let’s think about MakerDao, one of these protocols. Through it, you can deposit an asset and, based on that deposit, acquire a dollar loan. For that, it uses the infrastructure of the Ethereum blockchain. For each asset deposited, there is a pre-defined rule of how much you can borrow.

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