Financial freedom has been on top of the minds of people since the 2008 economic crisis. This allowed Bitcoin to be born.
It has been a rough couple of months for Bitcoin and crypto at large. The market crashed substantially during May and June, which brought down many new crypto projects. As a result, many protocols have had to adjust and try to balance their spending, slowing crypto markets everywhere. The results have been paralysis in every sector.
Since the crash, the markets have moved sideways in most cases. There has not been a recovery and it doesn't seem like there will be one soon. In this time, it is better to remember why crypto matters. It is not only about prices and constant growth, it is about a new economic model.
An economic model based on freedom and independence at a global scale. Those are the founding principles of Bitcoin and crypto in general.
The monetary system of the world is a highly concentrated realm. Most of the global population can hardly access things like basic banking services, than talking to more complex products like loans, investing accounts, trading etc., is a pipedream. It is a reality that has been constructed to exclude the vast majority and leave them behind to a predatory illegal market or other forms of expensive finance.
The end result is very expensive across the globe. People who want to save part of their earnings are left without choices, those who wish to start a business can find credit, and those looking to participate in the financial markets have all doors closed. In the end, preventing access to finance for most of the population means that markets cannot grow outside rich countries.
All of these factors means that it is almost impossible to have monetary freedom. Monetary freedom means that people are able to access financial services that ensure each person has enough income, savings, investments and various sources of money that ensures their financial independence. This is not possible with the current financial market.
Addressing this lack of access to financial services is the main mission of Bitcoin and crypto at large. The possible results will be world transforming. As the millions of people left behind find access to cheap financial services the entire global economy will expand exponentially and not beholden to a centralized system controlled by a handful of companies.
To answer this question we have to answer what are financial services at the core? In the most basic sense, all financial services are just a ledger. In order to access loans, savings, investment, etc., a person needs to enter its information into a ledger and some sort of entity needs to maintain it, update it, share it, and -above all- make sure it is correct. This is because all financial services are just entries on a ledger, no matter how complex these are.\
As knowledgeable crypto users can spot by now, maintenance of a ledger is what a blockchain is. At the very center of any blockchain is the idea of the decentralized ledger. A list of economic transactions that is maintained by a collection of nodes spread across the planet with no central authority.
Bitcoin and crypto were designed to solve this problem. At the time of Bitcoin's creation it was thought that it was impossible to maintain a ledger in a decentralized system. It was Bitcoin that first proved this wrong with the introduction of the consensus algorithm Proof of Work. The event opened new possibilities for monetary freedom to people no matter their background.\
How? Well the ledger of transactions of Bitcoin doesn't need a bank of any type. This means that any person with a smart phone access to the most basic internet can buy, send, receive or store Bitcoin. A complete revolution for the vast majority of people on the planet.
The possibilities opened by Bitcoin led the way to a new type of industry decentralized finance (DeFi).
Bitcoin was the first decentralized finance service ever, but it has its limitations. The Bitcoin Network is slow, when prices rise it is expensive to use. Additionally, Bitcoin is very volatile, which makes it hard to use for most people. There needed to be a further evolution of the concept.\
To solve for these new sets of necessities the idea of the smart contract began. These are short pieces of code that can be uploaded to a blockchain and executed without the need of a central server.\
Smart contracts allowed developers the power to create any number of services, put them on a blockchain, and have anyone access them with no restrictions. The forest mover into this new space was Ethereum, and that has made it the most successful blockchain beyond Bitcoin.
The smart contract brought about the revolution of decentralized finance. In DeFi blockchain developers recreate the same financial products that exist in the old system, plus new ones, and bring it to the masses. Any financial service you can imagine is now accessible to any person on the planet, something that was impossible just 5 years ago. Here are some examples.
The world just experienced two major financial crises and as a result interest rates are near 0 in most countries. People looking to save part of their income using a bank basically make nothing for their deposits, and in some cases lose purchasing power due to inflation.\
But in the blockchain users are able to find savings accounts with an APY of 10% or more. As a result, people are again able to have their savings secured on a blockchain and see their money grow.
we have said the volatility of Bitcoin is what makes it difficult to use. The same is true for Ether, DOT, ADA, etc. To solve this problem a new type of token was created, the stablecoin. Stablecoins are crypto tokens that have an exchange of 1 to 1 with a Fiat currency, most often the U.S. dollar, but there others for euros, yen, and other major currencies.
So these can be stored for a long period of time. Also, they work as a form of payment and to save money without fear of any volatility side effects.
Many of us have thought of using the stock market to invest. But this is very hard because to enter it we need to do KYC/AML with some type of brokerage service, a difficult process in the best of times. In crypto, anyone can buy stocks with no restrictions. There are platforms such as Syntetix or Mirror Protocol that permit this.
Finally we have a type of service only possible with the blockchain. Yield farming is a way to gain rewards by providing liquidity or using a DeFi Dapp. These rewards can be crazym with some offering 500% APY or more. It is a glimpse of what the future of crypto with DeFi has to offer for its users.
All of these services are available right now on many blockchains in the form of Dapps. Collectively these have made more for the idea of monetary freedom for the average person in 5 years than the old financial system in 50 years. And we are only at the beginning of this new economic system.
There is a lot of noise and confusion in the crypto market right now. The recent crash has embolden the skeptics and many are calling for the death of Bitcoin and crypto. During these times is where we need to remember how far crypto has changed in a few years, how much it has transformed the world, and how far it can go in the future.\
In the short term the outlook may be negative, but in the long run the future remains in the hands of crypto adopters. There is no other technology out there with so much potential and there won't be a better time than now to enter the market.
