DeFi has great potential to simply solve inequality along with the unlocking of the financial freedom for people that are around the world. It is also a belief that anyone, irrespective of the background or about the socioeconomic status. It may also achieve upward level of mobility and create the generational wealth. On the other hand, the system of traditional financial has left behind great segments of population. It have little means to create the credit and completely participate in the international economy.
Now, individuals all around the world should provide the extensive proof related to existing credit. Though, consenting to perform a proper background check prior to considered for the loans, credit cards and leases. Unluckily, those are born with financially stable situations that have a great benefit when it is about building & sustaining credit score. People attempting to simply escape the financial hardship which are penalized for same reasons which simply struggle. Over the passing time, credit bureaucracy has also morphed in the vicious cycle which strays quite far.
Key faults related to DeFi and credit bureaucracy
Unluckily, pandemic simply widened gap of financial inequality. Now, topmost 1% of Americans own additional wealth as compared to bottom 92%. With 50 richest people owning to wealth from bottom 165 million. On the other hand, people on bottom of wealth pyramid usually have the limited access for financial products and education. The tools which have access and are exclusively high-cost credit & loans. Though, such kind of the loans may even be life-saving as they tend for creating the debt culture. It simply preys on people that lack the monetary literacy.
Potential of Decentralized Finance!
DeFi is the umbrella term which consist of applications like decentralized exchanges, stablecoins, prediction markets and margin trading. Such kind of the emerging philosophy related to banking & financial services gets rooted through blockchain technology.