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Blockchain could make the financial system more neutral, transparent and verifiable

We want to ask you a question: Let’s say Andrea has a pen and lends it to Bruno, who lends it to Claudio. How many pens are there?

From what they taught us in school, it seems like one thing; but this is not the case when it comes to finance. The interesting thing about this industry is, value increases with every step: just imagine that today the derivatives market exceeds the entire world GDP by ten to fifty times. It’s like saying that for every item produced, there are fifty more that have been budgeted by someone. How is this possible?

The answer is very simple: Finance is like a house of cards, where each transaction allows you to add another card, as long as the rook does not collapse. Fragile, don’t you think?

Again This is how the world of finance works: It can grow forever, but it only takes one breath to turn everything upside down.. This happened with the Internet bubble in 2000; It also happened with the subprime mortgage bubble in 2008. Someone believes that this is happening even now with cryptocurrencies.

True, but not so much: because thanks to cryptocurrencies, and especially DeFi, we will be able to solve this problem. There is nothing wrong with having sophisticated financial instruments or the power to multiply bread and fish; their main flaw is the lack of transparency.

Consider a food without any labels indicating ingredients, nutrients, allergens, or source; or an untested drug, without any leaflets or warnings. All this may sound ridiculous in just about any industry, but in the financial world it’s normal. Not because there are no rules – there are actually so many! – but because the data is missing: the current system is not transparent, verifiable or even accessible. Not out of malice, but because of the technological limitations of an industry that had to make virtue out of necessity.

luckily today Thanks to blockchain, we have technology that can lay the foundation for a more neutral, transparent and verifiable financial system.. This solution is called DeFi.

The most incredible aspect of this technology is that it does not limit the financial market’s ability to multiply value, but rather increases it. Automated contracts and public records add to DeFi’s natural ability to create advanced strategies; where each step uses the result of the previous one and allows you to increase your financial risk according to your risk profile. If we used the example of a house of cards before, now we are talking about a Lego castle that can be expanded at will, while always remaining intact at the base.

In the coming weeks, we will detail how DeFi can be used to create modular strategies that maximize expected profits. The important thing today is to remember that DeFi really has the potential to improve the financial system for the better, but it takes time. If what has been said in the preceding lines remains true, this is equally true: technology is still immature today: while solving transparency and accessibility issues, it continues to be a party to manipulation and hacker attacks.

Alberto Cuculachi is an entrepreneur, popularizer and university professor in Marketing and Business Development. He has been following the blockchain world since 2013 and founded his YouTube channel DeFi Talks in 2021. It has reached more than half a million people in more than 100 different countries through its channels in the past year. Today, he is engaged in creating useful educational content and tools to make the world of crypto and DeFi accessible to all.

Alessio Vilmercati is a 22-year-old investor and DeFi enthusiast with a Business and Management degree. In 2022, he obtained his Blockchain Technology & Management certificate at the Blockchain Management School in Rome. Predominantly in the world of DeFi, Alessio devotes himself to reviewing dApps every day, looking for new opportunities every day. As an open supporter of this technology and its future application in the traditional world, DeFi Talks collaborates with the YouTube channel.

Federico Chironi is a 23-year-old trader and DeFi enthusiast with a Business Administration degree; He then chose to continue his education with a Master’s degree in Blockchain Technology and Management at the Blockchain Management School in 2021. He has been studying and investing in the blockchain world, especially in the DeFi sector, since 2020. Decentralized Finance, which will bring it in the coming years, has recently been doing outreach activities on the subject in cooperation with the YouTube channel DeFi Talks.

Luigi Travaglini is a popularizer and technical advisor in the cryptocurrency industry. He intersects with the crypto world between 2014 and 2015, then becomes passionate and never breaks himself off. Combining his academic career with a long technical study in the field of blockchain, he started to provide training and assistance services in 2018.

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