346: What's the Big Deal about DeFi?

The cryptocurrency markets have been crushed and don't be surprised if they go even lower once the full extent of the FTX meltdown is realized. However, it's clear to me that this in no way is the end of cryptocurrency. Believe me, I've been around crypto long enough to have seen it declared dead several times over. It won't happen. The reason for this is that behind cryptocurrency is a technology. It's not just tulips. Tulips didn't do anything. Underlying crypto assets lies decentralized distributed ledger technology that will change our world. Ok…so you've heard me and others make that statement before and it might be getting old. So, I think it's important to go into more detail and highlight examples of what this technology can do. Decentralized Finance (DeFi) is a major revolution that is happening now. It is still in its infancy but it is pretty clear that this technology represents the future of banking and really all market transactions. But why is it advantageous? This is an important question. You can easily be fooled by people selling you "tokens" while they are raising money for real estate or other assets. Tokenization does not replace good operations. In reality, most of these offerings are just marketing gimmicks. Just because your shares are represented by a token doesn't mean a lot. There are clearly advantages to tokenizing assets in the sense that they can be traded and potentially provide more individuals access to things in which they might not otherwise be able to invest. But there are a lot of kinks to be worked out. And while I believe in the technology, the current state of DeFi is still fraught with charlatans and Ponzi schemes. A major reason this is possible is that few DeFi projects are purely decentralized. When someone is in charge, that's not decentralization. It's a complicated topic so I asked someone knee-deep in the DeFi world to help us understand it a bit better. You should know a thing or two on this topic as it will enter your world sooner or later. So make sure to listen to this week's episode of Wealth Formula Podcast!