First of all, let's define what is meant by the concept of "decentralization" which, according to the RAE, is defined as "transferring part of the authority". And here is the first big point, the transfer of authority. With this in mind, the evolution of technology has led us to find three different formats: 1. decentralized systems, 2. decentralized applications, and 3. Decentralized Finance (commonly known as DeFi).
Along with this, a second important issue that decentralization proposes is the absence of intermediaries. And in this sense, one of the keys is Blockchain technology. It is the main basis on which the absence of intermediaries is based, since its way of functioning is through consensus mechanisms. Today, cryptocurrencies, non-fungible tokens (known as NFTs) and the aforementioned DeFi run on top of this technology.
Although Blockchain technology has been evolving since its appearance, it is no less true that ordinary people tend to confuse the crypto system with the technology behind it. Cryptocurrencies are traded between private parties, in a decentralized system based on Blockchain technology where the risk that is assumed is between private parties. And this is precisely what differentiates it from the traditional financial system.
Decentralization, understood as the transfer of authority as I mentioned earlier, sounds good but there is a key factor to build and size and that is trust. In the DeFi space there are no regulations (at the moment), there are some scalability issues of the infrastructure, and they also have lower liquidity. As a result, it is more difficult for the average citizen to understand. And this is key if we want to achieve a massification like the one that the traditional financial system has today
Another very interesting concept to understand the current context of the world of financial services is that of Web3. In this one, the content creation is not from the platform where it was created, but from the owner. And by that I define it as the Internet of value. If it thrives, it will change the way we do business and the way we conduct ourselves on an interpersonal level. We have a lot of promise ahead of us, but we still have challenges to solve. Cases like FTX's generate trust issues and, as we have already seen, this is essential to achieve a more decentralized world.
Returning to DeFi as a promise for the future, interoperability between the various technologies, platforms and infrastructures will be necessary because customers need facilities to manage digitally, and regulation will be necessary because there is money and value in its most diverse forms involved. Possibly we will have exchanges in a regulated environment, with governance mechanisms, multiple chains on the platform and eventually there will also be a financial metaverse.
Finally, and to remember something very important. Technological change is exponential, but human beings are not. This means that along with technological development and innovation, it is necessary to work on the change in behavior that they generate in people to achieve adoption and subsequent massification. So, Decentralized Fintechs? Yes, but with interoperability at the level of infrastructures and management of the cultural changes that this implies