Vitalik Buterin is Convinced Decentralized Finance and Ethereum’s Blockchain Will Disrupt Finance

Vitalik Buterin, the co-founder of Ethereum (ETH), mentioned that finance will clearly be disrupted by blockchain technology and decentralized networks. There are different projects such as MakerDAO, Augur and Etherisc that could make efficient an “insanely inefficient” sector.

Could DeFi Be Better Than Ethereum?

During a presentation that Buterin gave at ETHCapeTown 2019, he said that it is very inefficient to send and move funds between accounts. International payments are also very costly and inefficient for companies.

On the matter, he commented:

“If you compare it to existing technology outside blockchain, finance is the sector that’s the most terrible. In many countries, even really developed ones like the United States, you’d be surprised how insanely inefficient it is to move money between account and once you start talking about international payments then it gets even worse.”

At the same time, Buterin mentioned that there are other sectors that are already using the technology. There are some companies such as Amazon and Airbnb, for example, that have been working in order to create decentralized applications to enhance the user experience and become more efficient in what they do.

MakerDAO is a platform that gets ETH collateralized loans and users receive Dai, a stablecoin pegged to the US dollar. Meanwhile, Augur is a decentralized prediction market that uses Reputation and group consensus. Users can bet on different outcomes regarding sports and other events.

Vitalik Buterin mentioned that although space is growing, these are just applications that are used by virtual currency users. There is a lack of services and a clear connection between these blockchain applications and the world outside virtual currencies. This is something that must be changed and that needs to be improved to reach mass adoption of distributed ledger technology (DLT).

At the same time, Buterin explained that there are some apps and projects that want to bridge DeFi and the traditional financial world. There are some firms that have to handle a large number of data and incur in large administrative costs that make the whole process more inefficient.

There are some decentralized insurance products that could mitigate some of these costs, including HurricaneGuard, Nexus Mutual and Dynamis. At the same time, these decentralized systems could reduce the overhead that is required to make payments. With new decentralized products, it might be possible to pay more and reduce costs.

At the moment, according to Joseph Lubin, there are 100 projects working on decentralized finance. Mr. Lubin is also the co-founder of Ethereum and the founder of ConSensys. As he mentioned, decentralized finance has grown into one of the most active sectors of blockchain in 2019.

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