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DeFi and Credit on the Blockchain: Why Loans Are Better When They’re Decentralized

Published 05/25/2019, 06:50 PM
Updated 05/25/2019, 07:03 PM
DeFi and Credit on the Blockchain: Why Loans Are Better When They’re Decentralized

In the feverish quest to decentralize anything even remotely open to decentralization, one of the most promising areas is finance and the financial industry. This shouldn't be too surprising, given bitcoin and the origins of blockchain technology, but at a time when even babies are being put “on the blockchain,” the emergence of decentralized finance (DeFi) provides welcome proof of crypto's real utility and applicability.

And while DeFi is covering a wider range of areas — from remittances to derivatives and investments — its most promising sector involves credit and lending. That's because, thanks to the openness, security and transparency of blockchains, it's possible to make loans and credit available to a larger pool of people than ever before, while the interoperability of blockchains opens up the possibility for creating a spectrum of new lending products and services.

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