In recent years, the world has witnessed a wave of crypto start-ups. These start-ups have recognized the inefficiencies of the current financial systems and the need for a better financial solution. They have identified blockchain technologies more suitable for the sector. What makes blockchain-based financial services platforms and products more suitable is that they are more accessible on a global scale hence making it an alternative decentralized finance solution to the traditional one.
There are several intermediaries present in the traditional financial system, making it more potential for several security risks. As per the recent data available, target financial services are targeted 300 times more than the other sectors. Almost 45% of the financial intermediators, for instance, stock exchanges and money transfers, face cyber-crimes every year. These attacks make people vulnerable to economic and data loss.
Millions are deprived of essential financial services by the existing financial system because of barriers such as wealth, location, status, etc. A decentralized monetary system based on a blockchain provides access to people regardless of any obstacles. Crypto based start-ups have recognized the potential of the open-source networks to decentralize and change the economic activity. Because of the permissionless and transparent nature of the crypto blockchain, it can replace the present financial system.
Because of being permissionless, it can solve financial inequalities posed by the present strongly centralized economic system. It also means that the data isn’t stored in a centralized server; they are kept scattered everywhere, across the devices. Moreover, all transactions are publicly auditable, making blockchain completely transparent. With several firms in the financial sector opting for crypto and blockchain-based platforms and product, they are on the path of revolutionizing the present financial system.
Although there are several positives of the blockchain-based financial services, still there are several hindrances that are lying in their way. One of the main obstacles is the lack of basic universal protocols that makes internet accessible. Besides, a decentralized financial system with no intermediary can lead to untested and utopian fantasy. Besides, blockchain entries do not last forever, are not immutable and are not indestructible.
It will be interesting to see how blockchain and crypto-based financial services take on to the current financial services and how it responds to the wave of blockchain and crypto-based services.
