While decentralized finance has existed for some time now, it has grown in scope over the past decade. Companies like Earnity, which Dan Schatt and Domenic Carosa co-founded, have been developing decentralized finance products to accommodate people interested in investing.
Over the past few years, there has been a growing interest in decentralized finance, which refers to financial products that either use blockchain technology or give users access to blockchain-based financial services without using traditional centralized institutions such as banks.
The growth of decentralized finance is often associated with Bitcoin, but hundreds of different projects focus on building decentralized financial applications and tools. The industry offers many services, including lending platforms, virtual currency wallets, payment processors, and various investment opportunities.
In the next 10 years, decentralized finance is projected to profoundly impact world banking, with companies such as Earnity—founded by Dan Schatt and Domenic Carosa—gaining momentum and developing more products and services for the movement. This impact will likely start small, with decentralized finance impacting the industry in a few different ways.
Most new decentralized finance applications don’t require any bank to operate, offering financial services at no additional cost. Instead, they use blockchain technology to keep these services running smoothly and securely, effectively eliminating the need for fees and third parties in general. Since banks generate their income through fees and commissions, these applications will likely hurt their business model.
Decentralized financial services are decentralized by nature, meaning they don’t require any physical branch or representative to operate. This means banks could lose some of their most important perks, like having many employees answer customer questions and facilitating the opening of new accounts.
Blockchain technology is a strong competitor for banks. And banks may also start to rely on blockchain technology to keep up with their customers’ demands, which would allow them to avoid becoming obsolete.