In the third part of the series, we will look at the problems with traditional finance and how DeFi solves them all. DeFi seeks to create a better financial framework, made possible thanks to the introduction of the internet and blockchain technology, particularly in three critical areas of the financial system:

1. Payment remittances – no more expensive or fraudulently hidden fees, as well as no more time-wasting. Every fee or charge would be made public and be very small when compared to centralized finance. You’d wait for the money to arrive in approximately ten minutes, not ten days. Also, the documentation required to transfer money or transact has become ridiculous, all to obey financial laws that they (centralized institutions) break with ease.

This point will resonate with anyone who has worked remotely and received their wages in a foreign currency. The fintech solution used to receive your money may take a charge for every deposit into your account. Some of these charges are hidden and you will not be informed about them unless you file a complaint. This was my personal experience with Pyypl. They would take a charge from the amount I want to deposit, then take another charge from the money already in my account, like a double charge. After this ordeal, I lost trust in all fintech operations and switched to decentralized payments instead. By paying through the blockchain, I know how much I’ll be charged and there will not be any hidden charges. Send any amount of $USDT via the TRC-20 network and a charge of $1 will be applied. No matter the amount, the charge will remain at $1. It’s not a hidden charge, it’s not a charge that varies according to human greed or company policy.

2. Accessibility To Financial Services – Reading this, you probably have money in your account, which means you probably have access to banking services and credit lines. While that’s great, how many people do you think don’t have such access or are simply put, unbanked?

A map of “the unbanked” in the world in 2017. (Source: Global Findex, World Bank). Note, that this excluded adult populations with an unbanked populace of less than 5%.

This data would be inaccurate in 2023, however, this provides a very grim but sufficient look. China and India suffered the most due to their population explosion. Africa, Eastern Europe, South America and Asia have the bulk of people who have no access to bank accounts and other banking services. About 1.7 billion people had no access to banking services at that time.

DeFi solves this in a spectacular way as World Bank also estimates that two-thirds of the 1.7 billion unbanked have or have access to an internet-enabled device, thus DeFi protocols, smart contracts and decentralized apps (Dapps) that provide financial services such as transfers, loans and lending, etc., will become easily accessible to these people. Decentralization offers every person on earth with money, the chance not only directly to control their money but to also access financial services directly, without any intermediary or financial institution’s lengthy authorization requirements.

“DeFi represents a movement that seeks to push borderless, censorship-free, and accessible financial products for all. DeFi protocols do not discriminate and level the playing field for everyone” (p7. How To DeFi, 2nd Edition - CoinCegko)

3. Centralization and Transparency – Remember Lehman Brothers? You probably might if you were part of the working class back in 2008. Once one of the largest banks in America, handling a reported $639 billion in financial assets, it became the “opening bell” (stock marketers would get this, ha-ha) to the most spectacular financial disaster this century, as well as going into bankruptcy and permanent closure. However, there is a lingering question, “why did a reputable investment bank that observed all regulations by the various securities agencies fail?” The answer is quite clear. The power over finance was centralized, i.e., power over money and transactions involving money was given to the banks alone.

Banks and financial organizations have become too large and too powerful, with more unchecked powers than ever before. Common people are now in fear of their banks messing with their money. Take the sad events of the End SARS protests in Nigeria. After the protests, the Central Bank of Nigeria targeted more than 15 influencers who they tagged as “terrorists” for their role in the protests. With such an unlawful declaration, the bank withheld the money these influencers had in their bank accounts, leading to a prolonged court case. The same thing in Canada last year during their trucker protests, their government conferred excessive power on the banks and closed the accounts of everyone caught protesting.

How did the people in these 2 cases navigate the situations of excessive government control? They turned to Bitcoin, yes, they began to use Bitcoin and other cryptocurrencies to circumvent the unlawful seizures of their assets. This is extremely important because it shows us that defi gives us back the power over our finances. With decentralized finance, there is no way for banks or governments to confer excessive, unregulated and immoral financial powers upon themselves when they want to deal with citizens.

In part 4, I'll briefly take you through the 9 pillars defi was built on. If you found this educational and helpful, please share it with everyone you know who wants to learn defi and don't forget to upvote and comment if you have any questions or concerns

Till next time