The Current And Future State Of Crypto And Why Decentralized Finance Should be More Accessible

By Yubo Ruan, Founder of Parallel Finance.

Cryptocurrency began in 2009 with Bitcoin BTC/USD. In the first few years of its existence, user experience was a far cry from what it is today. Most people who had purchased Bitcoin typically possessed strong technical skills. The goal of Bitcoin, however, was to act as an alternative currency to government-issued fiat with mass adoption being the main driver. As more projects launched and the technology improved, the industry had an epiphany, for adoption to be possible, cryptocurrency needed to be easily acquirable, storable, and spendable. Essentially, user experience needed to be prioritized. A regular adage I heard being thrown around at the time was “so easy your grandparent could use it”. A goal that unfortunately still eludes the space today. However, great strides on the payments and exchange side have been made since those days. An average user can acquire Bitcoin from traditional tools they used for their fiat currency such as Cash App, Paypal, and Venmo. There are still some improvements needed on the payments side, however, traditional payments tools and behavior have been replicated or incorporated into the cryptocurrency (or vice versa), which has helped adoption increase. Unfortunately, adoption on the payments side has paled in comparison to the investments side. As stories of regular people becoming new millionaires and billionaires became more and more commonplace, more people started to learn about cryptocurrency in hopes that they will be the next big story.

When Ethereum ETH/USD was launched in 2015, the concept of smart contracts added a critical yet additional layer of complexity to the blockchain industry with smart contracts. Smart contracts allowed for even more functionality within cryptocurrency that was previously not possible. When it came to investments, these possibilities and their return on investments were hard to ignore. Coupled with regulations in traditional cryptocurrencies, programmers began building tools to remove the intermediaries, bringing cryptocurrency back to the peer-to-peer nature it was initially intended for. However, similar to the aforementioned crypto-payments evolution and its corresponding steps, Decentralized Finance (DeFi) programmers focused on functionality and not on user experience. Adding incentives and gamification to investments to create repeat behavior, high returns, and so on. Once again technically skilled individuals who grasped both investment concepts and technological concepts would rule this space, finding new ways to increase their portfolio balances. This is why some may have noticed many institutions are large players in DeFi. 

This brings us to today. It seems we have skipped an important step in DeFi that has prevented the average person from entering this space and taking advantage of its value accordingly. This lack of adoption from the masses limits the growth of the industry. For example, DeFi is almost entirely conducted on desktop computers instead of mobile. Programmers have developed these solutions to work for them and others like them, and not the average user. This is where I believe the next epiphany will take place. I envision a future in DeFi that is mobile-first, easy to use, and easy to understand. Educational resources will be plenty, instead of a handful of organizations providing this education, rather education will be provided in multiple areas such as universities as part of financial education, or in impoverished areas where people can lift themselves from poverty using DeFi. DeFi will be something companies can teach employees to leverage to help grow and manage their balances, payroll, and taxes. Furthermore, I see a future in DeFi that is regulated in a smart manner. Regulations initially were more reactive, focusing more on stemming what is not understood rather than working with the crypto industry to put in place smart regulations that help foster innovation in their respective countries while also stemming the flow of money laundering or terrorist financing. This has changed in recent years and even months as more institutions have entered this space pushing lawmakers to work with the industry as opposed to against it. DeFi is now the next big question with regulators which is why I recommend anyone in this space with access to working groups or regulators to get involved in the best way they can to help educate and raise awareness of what DeFi is, how DeFi works, and how it can meet the aforementioned goals of regulators and the country’s crypto industry. 

As we look towards the future of DeFi, I am delighted by its potential. Its ability to transcend barriers of the financial industries of the past and the prospect that DeFi can connect markets in a trustless and unbiased way could actually create real financial freedom for all exactly as Bitcoin intended. As we move into this next era of cryptocurrency in what I believe will be a phase of consolidation and optimization to reach a broader, less technical audience. I invite more from within the Defi community to build for those who are currently out of reach and create the financial future I believe so many of us dream of. 

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About Parallel Finance 

Parallel Finance is an institutional-grade lending protocol backed by the likes of Sequoia, Founders Fund, Polychain, Lightspeed Venture Partners, Slow Ventures, Blockchain Capital and Alameda Research. Parallel Finance specializes in decentralized finance-related services and products, which include lending, trading, staking, and derivatives on multi-chains while assuring user safety and security.