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Decentralized Finance: the Key to Financial Inclusion

As bitcoin's price skyrockets, it's easy to get wrapped up in the hype. Cryptocurrency remains a speculative financial technology, but beneath the sparkle of "all-time high" prices, you'll find it can solve many problems. Among the most important? Financial inclusion. (Namely, all too often, finance is not inclusive.) With cryptocurrency, anybody can create a money system and scale it globally, instantly, in any configuration they want. All the rules get programmed into a token and the blockchain guarantees everybody will get the results they expect. As a result, you can create free, open, permissionless financial networks that replace today's closed, opaque systems where you need to either "know somebody who knows somebody" or look the part of somebody who does. To access these new financial networks, you don't need to know anybody. You just need to download the right app. In 2020, cryptocurrency engineers built financial protocols called "decentralized financial applications." Using platforms built on these protocols, everybody can lend, borrow, create liquidity pools and investment funds, and participate in yield-producing activities. Already, these platforms have serviced tens of billions of dollars in financial transactions. To access these protocols, you simply need a cryptocurrency wallet and a token that’s programmed to work with the platform. There's no way for anybody to turn you away from these platforms. The code will not judge you on how you're dressed, what you look like, what accent you have, or how much money you make. It won't ask somebody to vouch for you. It's not just that you can use these platforms. You can build on them, too, and make them work however you want. Insiders compare this concept to lego bricks -- you can stack them or arrange them as you see fit, to serve whatever purpose you desire. With decentralized finance, innovations no longer need to come from bankers, governments, economists, and political theorists. When money exists as computer code, anybody can fashion it into anything they want. The financial networks of the future will be built by entrepreneurs, computer scientists, developers, community leaders, mathematicians, and common people like you and me. These networks have the potential to connect the poor and disenfranchised with deep pools of capital, data, and opportunity. To make these networks financially-inclusive, you no longer need to change the system. You can simply build a new one. All you need is a laptop and an internet connection. What discoveries will come from this new technology? Can humanity craft financial systems that benefit everybody, not just the financiers? I can’t wait to find out.

Mark Helfman publishes the Crypto is Easy newsletter. He is also a top bitcoin writer on Medium and Hacker Noon. His books explore the social, cultural, legal, and business challenges of cryptocurrency. Learn more about him in his bio.

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