- DeFi is here to stay and will challenge the present banking system
- Growth in DeFi is a testimony that there is something wrong with traditional banking system
- DeFi will help anyone with funds to become a lender
Billionaire investor Mark Cuban is confident DeFi or decentralized finance is here to stay and will one day challenge the present banking system. The bullish growth of DeFi and applications is a testimony to the fact that something is seriously wrong in the traditional banks which is spurring the growth of DeFi.
DeFi enables anyone with funds to become a lender also
In response to a debate on twitter, Cuban responded and said that one of the USP of DeFi is that it simplifies borrowings for personal purposes. Cuban said that it is a gargantuan task to borrow money from a Bank. However DeFi enables anyone with funds to become a lender also. DeFi applications seek to transform the conventional financial platforms such as banks and exchanges with cryptocurrency. Most of the DeFi platforms run on Ethereum Blockchain.
DeFi will enable users to lend out cryptocurrency just like a bank which does with fiat currency. In the process the lender can earn interest. The paperwork and other processes involved in borrowing from a traditional financial system are long and cumbersome while the only requirement for a DeFi loan is to provide collateral with other crypto assets.
Cuban added that decentralized finance offers consumers what they need with the least resistance in the process of getting what they need. The greatest thing about DeFi is that it is dynamic and evolves according to the needs of consumers.
However Cuban does say that DeFi will not end the Banking process because Banks are not stupid and will effect changes that try to minimize the hassles. However DeFi still has a big potential to disrupt the banking process. He gave the example of Fintech who picked off features that opened doors to apps that garnered millions of customers. DeFi will also evolve in the same way.
Cuban also lamented that some businesses like the traditional Banking system is resistant to change. Otherwise the system would have evolved according to circumstances and needs and there would never have been a need for DeFi.
However, DeFi is has its own pitfalls. There is no regulation or insurance of your money. Further people must be ready to deal with wild swings in values since crypto currency and volatility are synonymous with one another. Therefore experts warn investors and contend that investors must dabble in cryptocurrencies only if they are also prepared to lose everything.
Cuban predicts that the big shots in DeFi are not averse to regulation since it will help the industry to get respect and remove its Wild West image. Cuban has been a very strong advocate of crypto trade and has a crypto portfolio with investments in bitcoin, ether, dogecoin and other altcoins, along with NFTs, or no fungible tokens, and many blockchain companies.