How Will DeFi Revolutionise Finance and Shape the Future of Money?
In this episode, Samantha Yap and Sheila Warren delve deeper into the emerging world of DeFi and its potential to transform traditional financial systems. Sheila Warren is the CEO of the Crypto Council for Innovation (CCI), a global alliance formed to showcase the transformative potential of crypto.
Together they explore the future of money in relation to technology and society, emphasising the role of crypto and decentralised governance in shaping societal interactions. They also discuss the social impact of blockchain and cryptocurrency, addressing inefficiencies in philanthropy and promoting transparency.
The Power of Decentralised Finance (DeFi)
DeFi, while still relatively new compared to Bitcoin, its decentralisation aspect is the most powerful component. Operating decentralised systems is challenging but holds great potential for the future. Sheila believes that as monopolistic activities increase, embracing decentralised governance structures will become more compelling and beneficial for society. DeFi and Bitcoin are early experiments in this decentralised environment, and their progress is worth monitoring closely.
TradFi vs. DeFi: Hype or Reality?
There’s a perception of an existential battle between traditional finance (TradFi) and DeFi, but Sheila believes this narrative is largely hyped for the media. While traditional institutions have made significant investments in the crypto space, Sheila doesn’t see DeFi as an imminent threat to their existence. Instead, she sees many reasons why TradFi institutions would want crypto and DeFi to succeed. While DeFi has seen hype and bear markets, its total value locked is still small compared to the market capitalisation of banks worldwide.
Overall, Sheila views DeFi as an interesting and promising area rather than an imminent adversary to traditional finance.
The Future of Money
Sheila envisions a tokenized economy where assets are digitized, fractionalized, and seamlessly transacted on and offline. She compares it to the gaming industry, where digital objects have value and transactions occur with ease. As technology advances, the boundaries between online and offline worlds will blur, with AR and wearable devices becoming commonplace. Sheila believes that the crypto economy’s inevitable growth demands a focus on equity, inclusion, and safety to create a better future for society.
Crypto for Social Change
There is a potential for blockchain and cryptocurrency to drive social change by addressing inefficiencies in philanthropy and other sectors. Sheila highlights the importance of transparency as a tool for accountability and positive change. Examples like carbon credit tracking showcase how blockchain can expose fraudulent activities and benefit those without power in the system. Sheila acknowledges the need to balance privacy and transparency, understanding that both have their place in different contexts. Overall, she believes blockchain can play a transformative role in fostering social impact.
Promising Use Cases
Sheila is excited about blockchain’s potential in carbon accounting and authentication. She mentions the Starling Lab project, using blockchain to document genocide footage for potential use as evidence in trials. She also highlights the importance of democratizing finance, providing credit, and fractionalized real estate. Many projects are exploring ways to leverage blockchain tech for more inclusive opportunities.
The Evolution of Money
Money underlies the economy, and as society increasingly merges online and offline realities, the concept of money will change. Digital objects and assets will become critical for credibility and authentication. The programmability of money will be crucial in the digital economy. Sheila emphasises the need to democratise the underpinnings of this transformation to create better systems and architectures that benefit everyone worldwide.
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