Andreas Antonopoulos Believes DeFi Can Serve The Unbanked, But That The Industry Is A Decade Away From Maturity

Bitcoin advocate and entrepreneur Andreas Antonopoulos spoke about how DeFi can broaden access to financial services globally in an Ethereum Q&A on his YouTube channel, but added that the industry is about 10 years away from making that dream a reality.

Antonopoulos argued that the goal of DeFi and cryptocurrencies in general is to allow more people to access financial services by removing intermediaries and gatekeepers from the process. He added that large swaths of people are excluded from traditional finance because the institutions running the industry set what he believes to be arbitrary criteria for participation in an effort to mitigate risk. 

"This is the world we live in where billions of people have very limited access to financial services because it doesn't serve the interests of the banks, the investment banks, the financial services organizations to include these people."

Participating in traditional banking requires a substantial amount of paperwork including identification and often an address, excluding groups like those who are homeless or undocumented. In rural, low income areas there are also often fewer banks because the smaller and less wealthy population make them an unattractive place for banks to set up shop. This leaves the people in those communities with even fewer options.

"The whole purpose of cryptocurrency I think is to extend financial services to those who don't have it by removing those who get in the way by demanding identity credit documentation and all of these things that can be enormous and insurmountable barriers."

Not having a bank account can come with expenses of its own. For example, if a lower income person doesn't have a bank account and they do receive a check they have to go to check cashing services which often charge high rates. DeFi has the potential to solve this problem because most platforms don't require identification or paperwork allowing more people to participate. 

Antonopoulos pointed to stablecoins as a strong onramp for the underbanked to explore DeFi because they can gain exposure to cryptocurrencies without falling victim to the market volatility that comes with currencies like Bitcoin. However, he added that DeFi requires a lot of understanding and that the immature technology is prone to bugs and security risks which still need to be ironed out. 

"I think the difference between the vision and the reality may be as much as a decade of polishing and maturing the interfaces broadening access increasing liquidity reducing volatility maturing the underlying security of the smart contracts and building more and more robust infrastructure so that it can be more broadly applied."

By Emily Mason

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