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The question on what I think of De-Fi (decentralized finance) has come up often over the last year or two. I have avoided the topics as I don't view myself as a de-fi expert however after watching a presentation on the topic I figured I needed to speak up. While De-Fi's goal is to eliminate a centralized system I predict we will end up in the same system we currently have just a few new players will get added. To be clear today's financial system is not very centralized. Banks all operate in a capitalist system (at least in the US) where they are competing for business. Even exchanges differ in rules and regulations between countries/unions/regions (the US has a different system than Europe for example).

Two main goals of De-Fi is to reduce transaction time and increase access to financial services. While these are good goals and De-Fi seems like the way to go (automation with very little costs) once regulations are added that protect consumers, the costs and transaction times will go up. I think the majority of De-Fi participants have good intentions however a lack of understanding around regulations seems to be the key driver of why their costs will be low. You can't ignore regulations as this is what makes the current financial system slow and costly. Many of these regulations prevent fraud, terrorism funding, money laundering, and identity theft. It costs banks millions per bank just to keep up with the regulations. Individuals using traditional financial systems also benefit from these regulations however it isn't noticeable as these models and systems are doing their job.

Now De-Fi could be a great way to get your foot in the door on finance as banks have already been hiring people to keep up with current technology and some De-Fi firms will survive in the long-run. For investors it might also provide an arbitrage opportunity as De-Fi has a cost advantage as regulators catch up.

De-Fi presentation I'm responding to:
 https://youtu.be/48C-uhX7txk

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