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Today, we’re talking about DeFi or decentralized finance.

There are plenty of benefits for small to medium business owners and we’ll be taking a look at those.

In this lesson, we’ll talk about a few of those benefits and how you can use them in your business.

DeFi may not be specifically designed for small business, but it has many applications that would make your life easier.

Some of these have already been implemented—and are probably just the tip of the usefulness iceberg.

One huge benefit comes in the realm of bank loans.

Many small to medium business owners struggle to get approval for a bank loan to set up that business or expand it.

This is a huge stumbling block for business owners and has to do with the bank’s risk aversion and unwillingness to take a risk with their money.

DeFi is repairing this by making it easier for small to medium businesses to raise alternative funding through other sources.

This is already being used, but DeFi makes that alternate funding more accessible and transparent.

One example of how this works is Karma, a Russian fully decentralized peer-to-peer platform.

Using this platform, businesses around the world can gain liquidity through investment by users.

As the process is borderless, a person can invest in a small or medium business from anywhere on the planet!

Another benefit is the ability to create smart contracts through DeFi’s projects.

These are the same as standard contracts, outlining what the agreement requires and what happens should it be broken, but unlike a paper contract, it will automatically execute and enforce those conditions.

For a small business, this helps build a record and keeps both the business and its customers tied to an agreed-upon commitment.

The most well-known smart contract platform currently is Ethereum, but there are others that can do the job in a similar manner and just as well.

Another issue small businesses have that the blockchain can address is identity management in online security.

It’s just not possible for a business to operate offline nowadays, so ensuring the best security to avoid hacking and fraud—without paying exorbitant fees—is an ideal situation.

Decentralized hosting spaces can give small businesses an option if they can’t afford a big hosting contract with one of the field’s leaders.

It gives transparent identification tools within a secure space.

These decentralized options are also usually faster, thus saving time and money for the small business owner.

In our next lesson, we’ll take a look at starting a decentralized exchange platform.