In recent days, a group of well-known experts discussed the differences between traditional finance and Bitcoin. They also explained why decentralized finance (DeFi) has become an excellent option to reduce risks.

It was reported that renowned figures from the world of cryptocurrencies, such as Max Keizer, Jon Najarian, Ugly Old Goat, Alex Mascioli, and Tone Vays, recently talked about the role of traditional finance and how Bitcoin and the other cryptocurrencies have led new paradigm shifts.

Despite being initially harshly criticized by banks, the emergence of cryptocurrencies has now become an important new business opportunity for the sector. It is worth mentioning that very few paradigm shifts like that had penetrated the financial market so strongly in such a short time before.

After just 10 years, cryptocurrencies have an ever-increasing number of users that have made them a source of concern for regulators, the target of all kinds of speculation and, above all, an object of analysis by finance experts and curious followers, without forgetting the undisputed prominence of traditional banking.

Traditional Finance

It should be remembered that the knowledge of finance is oriented to commercial transactions based on money. Therefore, the panelist group said that finance has traditionally dealt with the most economical way to obtain funds. In contrast, finance also deals with the application of funds.

On the other hand, the experts note that the emergence of Bitcoin implied a break with many of the monetary dogmas hitherto irrefutable. Its most sensitive difference compared to the use of fiat money is that it does not have a physical entity but is only a digital means of payment.

It should be noted that, compared to fiat money or systems based on the gold standard, only the mathematical architecture in the design of these digital currencies defines their rate of issuance, their applications and the guarantee of value for financial transactions.

In this sense, the experts said that the popularity of these digital currencies has not gone unnoticed in the most recent financial forums of greater international projection, where they have occupied ample space for debate and reflection.

They also stressed that Bitcoin was widely known for having introduced a form that would revolutionize traditional finance, to the point that its underlying technology (blockchain) has proposed new productive and novel decentralized finance (DeFi) schemes.

DeFi as Best Alternative for Traditional Banks

Bitcoin was the pioneer of the decentralized space that promised high returns, but with greater risks involved. Its price is very volatile and has fluctuated more than 40% in a single day this year, so investing in cryptocurrencies forces users to have a lot of market knowledge and wisdom to read business patterns.

For this reason, the panelists stressed that decentralized finance (DeFi) has gained a lot of popularity in the last year and the companies inherent in this scheme have seen a 140% increase in investment since early 2019.

They reiterated that, in addition to the traditional high-risk investment that involves Bitcoin and other cryptocurrencies, DeFi platforms have become an excellent option to mitigate risks, obtain good returns and let go unnoticed the fraud that gave rise to controversy in many fraudulent schemes of the popular ICOs in 2017.

To conclude, Max Keiser said that the reason why traditional bankers do not like the cryptocurrency market is that the leading digital currency makes financial institutions “obsolete.” Therefore, they “rightly fear” for their jobs as Bitcoin replaces them.

By Alexander Salazar


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