DeFi capitalizes on distributed ledger technology (DLT), otherwise known as blockchain, which removes the need for intermediaries in financial transactions, such as banks and agents. The intermediaries become replaced by smart contracts, thereby enabling peer-to-peer transactions and payments. Peer-to-peer payments open many doors for entrepreneurs, as they no longer have to factor cross-border payments, where the costs of money transfers (and the time it takes) serve as a disadvantage for both the sender and the recipient. The instantaneous and cost-cutting nature of DeFi transactions plays a large role in its scalability, especially among institutional investors.
“You’re starting to see NFT (non-fungible tokens), and it’s not so much about just about how much is sold, market value, but more just that people are becoming more comfortable with it and so we’re starting to see these applications that are just popping up left and right. It reminded me so much of the early days of the internet where, in the mid-90s, people started talking about internet applications but the internet had been around for ten years.”