Business

The world doesn’t need banks, politicians or NGOs – it needs DeFi

Where I grew up, on the southern border in Texas, a tremendous number of people came to the United States to work and send money home. They don’t make much money, but they pay significant fees for their transfers. Her focus is not on getting rich, but on supporting those back home. They support their families in the hard daily work. It costs them too much to do this.

To be honest, my father was a migrant worker. He picked fruit in the fields. We sent money back to our family in Mexico. But the remittance providers threw away what little money he could make, leaving them with no hope of realizing the American Dream and thriving.

The world needs DeFi because of corruption. Big governments and international corporations are controlled not in the interests of the people but in the interests of their bottom line. Credit cards and personal loans have huge fees, as do wire transfers.

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When migrants send part of their income home in the form of remittances, they represent a large source of foreign income for many developing countries. Remittances, which are particularly important for low-income countries, account for almost 4% of their GDP, compared with around 1, 5% of GDP for middle-income countries. Remittances are important because they are more stable than capital flows and tend to be counter-cyclical, meaning that remittances increase during an economic downturn or after a natural disaster when private capital flows decline.

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DeFi lowers the fees migrant workers pay to send money home, saving them billions of dollars. Some transfers come with fees in excess of 20%. Out of desperation, people pay these fees to send a significant source of their income to households across Africa, Asia and Latin America, helping lift families out of poverty by providing financial stability.

Related: Crypto education can bring financial empowerment to Latin Americans

Hundreds of billions of dollars are sent home every year. This is far more than official development aid. Most remittances go to low- and middle-income countries. In Kyrgyzstan, Nepal and Liberia, remittances accounted for more than a quarter of national GDP, it said. According to the UNESCO Global Education Monitoring Report 2019, the average cost is 7%. In addition, traditional banks cost referrers the most. Their average fees are 10%! Large banks have transfer monopolies and exploit them. To serve the underserved, the world doesn’t need banks, politicians, or NGOs, it needs DeFi.

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The mugging of money transfers

In my view, centralized funding puts an unfair margin on migrants simply using their own money. That is why the world needs decentralized finance. There is no reason to pay fees when transferring money. So not. Instead of paying a huge amount of money when sending money home, use decentralized finance.

When I started looking at decentralized exchanges, I learned that because you keep your keys, no one could take your money from you. You can borrow, lend, trade on margin and much more. DeFi coupled with stablecoins is a powerful combination, especially for the unbanked.

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Thanks to crypto, not only can migrants send money to loved ones back home for less, but those loved ones back home can now earn passive income in the decentralized finance space. They can leverage reward systems like liquidity pools or staking and see the power of truly being their own bank. You don’t have to give your hard-earned cash to a middleman; a bench. You don’t need negative interest.

Related: Money in 2030: A future where DeFi and CBDCs can work together

DeFi projects are built for the benefit of others. Participants can make a profit that benefits others. Because of decentralized funding, food is served on people’s tables all over the world. That’s a beautiful thing. The sense of community in DeFi comes from giving power back to the people. It drives us all to do better for ourselves. It puts us all in a better position to do good. When we work to improve ourselves, we have no problem improving those around us. Healthy competition drives us all.

DeFi provides a trusted environment where transactions are managed by smart contracts. Blockchainers are rethinking and redefining finance before our eyes.

This article does not contain any investment advice or recommendation. Every investment and trading move involves risk and readers should do their own research when making a decision.

The views, thoughts, and opinions expressed herein are solely those of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.

RTR crypto is the global project manager for FEGtoken. He served as an emergency room nurse for seven years, as well as a year in hospice care, and also served on the Texas Emergency Response Team. He followed in his father’s footsteps and started investing in stocks before getting into crypto. His father lovingly told him he was an idiot. RTR left medical school in his third year to work with the FEG team on improving decentralized trading platforms and creating a safer crypto space for new and experienced investors.