The traditional system will collapse. This is the final product of cryptocurrencies, they will replace our finances

Cryptocurrencies are no longer just a financial asset that you can get rich quickly and easily. It is an incredibly rapidly evolving environment in which new projects and platforms are created every month.

One, if not the most useful, use of cryptocurrencies is the DeFi system, or decentralized finance, which, however, are still relatively unknown to the general public. However, this system has been operating in various forms for several years and a recent article we focused in more detail on its origin and basic information about how they work and what they provide for ordinary people.

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The fear of banks and the future of our finances. What are DeFi and how will it change your life?

Pavel Přecechtěl got to DeFi 4 to 5 years ago through bitcoin, but over time he turned his attention more to Ethereum and decentralized finances. He has been orientating himself in the world of DeFi since its very beginnings and currently devotes himself to activities in them as his full-time work. In addition to investing in protocols, he is also very active in their communities.

In an interview, we talked to him about DeFi as a whole, their benefits, uses, risks, but also about whether they have the potential to replace the current financial system.

What will you learn in the interview?

• What are the main differences between DeFi and the traditional financial system
• Whether DeFi has the potential to replace the current system
• What does DeFi mean for Ethereum and ether and whether it will become the biggest cryptocurrency
• What services do DeFi offer for ordinary people and how to get there
• Why Pavel no longer holds bitcoin and whether DeFis are safe enough

Can you describe what decentralized finance (DeFi) is and how it relates to cryptocurrencies?

DeFi is actually a set of applications that are largely based on Etherea blockchaine and in a way “replace” the centralized services offered by banks or financial providers such as Revolut and the like.

DeFi allows us to use these services in a decentralized form. These applications are part of the Internet and are available 24/7 to all people in the world, regardless of their origin, race or time zone in which they are located. They cannot be banned, abolished and banks and states have no control over them.

What are the main differences between DeFi and the traditional financial system?

Everything is 100% of the time online, everything is auditable, transparent, completely decentralized. Each transaction can look at the blockchain and check if the money is really there.

The protocols work as a company, there are weekly meetings, which in this case are public, as well, for example, the decisions of this “company” are not discussed by a few people, but all the holders of the tokens, who have the opportunity to participate in the protocol. In a way, it reminds the company’s shareholders, who can decide the fate of the company and see things “behind the curtain”, but in DeFi everyone can become a “shareholder”.

Another difference is the so-called tokenization and gamification. You can use a given token in a given protocol at your own discretion, which is associated with gamification, which means that the financial products provided by that protocol can be transformed into an entertaining form that people understand even if it is relatively more demanding products such as options and the like.

What is behind the creation of DeFi? Is this a natural evolution of the financial system due to the “obsolescence” of the one we know, or is it a completely new system?

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