Defi Will Not Replace Traditional Finance (2024)

Much of the hype around crypto, and Decentralized finance (Defi) in particular, is that it will replace the traditional finance sector.

Defi will never replace traditional finance.

The current financial system, which spans thousands of years, is the economic foundation from which governments rule and control society. Banking, lending, investing, property, etc. have all been annexed by governments to provide some structure and rules to society.

However, DeFi will create an alternative to traditional finance.

The traditional finance sector is based on physical goods, gold, government-backed money, and an archaic system of tracking money across borders. In a world where value exists in the digital world, a better system for financing these goods can exist; and this is where Defi steps in. It is not controlled by any one government, it does not rely on physical goods and systems, and it operates 24/7.

Bitcoin is the genesis of Defi, and Bitcoin along with all of the other Defi protocols like Uniswap, Sushiswap, and OpenWorld, have already grown to hundreds of billions of dollars. But this is very small in comparison to the hundreds of trillions of dollars in the traditional financial system.

The traditional finance sector senses the competition coming, and they will do everything they can to fight back, including enlisting the help of their government allies to fight off the crypto industry.

The latest example of this competitive attack is the SEC going after Uniswap, the most popular and innovative decentralized exchange.

But just like the SEC failed in their fight against the Bitcoin ETFs and against Coinbase, they will fail against Uniswap. The alternative to traditional finance is here, and we should do our best to encourage its growth.

OpenWorld, the company I founded, is an important evolution in building Defi, the alternative to traditional finance.