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What Is Decentralized Finance (DeFi)?

Written by Jason Williams
Posted January 3, 2022

If you pay close attention to the financial world, which I’m guessing you do because you’re here reading Wealth Daily, you’ve probably heard at least something about decentralized finance, or "DeFi."

But what even is it and why’s it so important? And, more pressing, how’s it going to make YOU rich?

Well, today I’m going to try to answer a few of those questions. And later this week I’m going to be releasing research on a company poised to dominate this new field.

So let’s get started, shall we?

So Much More Than Money

Most people’s first introduction to DeFi is through cryptocurrencies like Bitcoin and Ethereum (or maybe Dogecoin after last year).

And that’s a big part of decentralized finance. But it’s nowhere near all of it…

You see, there are thousands of different cryptocurrencies out there making up the multitrillion-dollar market. And they’re all a little different.

But they all have one thing in common. And that’s the backbone upon which they’re built.

It’s called the blockchain. And in the simplest form, it is what it sounds like: a string of blocks chained together.

But each of the blocks in this chain contains data. And each block can only hold a certain amount before it’s filled and a new one must be created.

That new one is linked onto the end of the chain of blocks that were filled before it and the process continues.

It may not sound special, but it is. And that’s because once a block is filled with data, it’s closed and sealed forever.

That means once information has been entered into a block, it’s permanent. It can’t be modified.

The blockchain is special for another reason, too. And that reason gives the new industry we’re discussing its name.

The blockchain is decentralized. That simply means it doesn’t “live” in one place or on one particular server.

It’s housed simultaneously all over the world in thousands of locations at once. That means there are thousands of identical copies of it out there.

And that means even if you could go back and unlock a block to access and change that data, you’d have to do it to every copy all over the world at the exact same time.

With current computer technology, that’s impossible. And it makes the blockchain the most secure kind of record that’s ever existed.

It’s those two qualities that make the blockchain so powerful and at the same time so valuable.

And it’s those qualities that are making so many of my friends in the financial world so excited about the future of decentralized finance.

This Changes EVERYTHING

The big deal with decentralized finance is that with everything running on the blockchain, there’s no need for middlemen like banks and brokers anymore.

Blockchain makes finance a peer-to-peer marketplace.

As Investopedia explains, “software written on blockchains makes it possible for buyers, sellers, lenders, and borrowers to interact peer-to-peer… rather than a company or institution facilitating a transaction.”

You want to buy a house? You won’t need a real estate agent, a title attorney, or a mortgage broker.

You can set up a sale directly with the owner (or via software-based middleman), process the “paperwork” over the blockchain, and get a loan from individuals looking to get into the real estate lending market.

It may not sound like a big deal, but it is. And it’s got old friends of mine in the financial services industry more than a little concerned.

Peer-to-peer lending can be applied to funding companies. Venture capitalists have access to lots of money. That makes them very valuable to startups.

But if startups can access vast pools of investors via the blockchain, venture capitalists lose some of their shine.

It’s the same with big banks.

They help fund companies getting to scale, but if those companies can sell their debt on a decentralized platform to billions of potential investors, they don’t need Morgan Stanley quite so much anymore.

Even the little banks are in trouble. Getting a mortgage is a hassle. It’s like getting interrogated.

You’ve got to give family history going back six generations and also tell them who your grandmother’s first boyfriend was.

OK, maybe it’s not that bad, but it felt pretty invasive the last time I got one. I may never have to go through that again, though.

The next mortgage I get might be funded by a thousand individuals all investing $1,000 each. Or maybe there’s a big investor who thinks I’m a good risk at 2.5% a year.

Either way, the banks get cut out of the equation. And it’s a very costly equation…

$20 TRILLION and Growing

The global financial services industry added up to $20.4 TRILLION in 2020. It’s estimated to have grown to $22.5 trillion in 2021.

And it’s expected to keep on growing. And every penny in that market is ripe for disruption by decentralized finance and the companies ushering it in.

This could be bigger than the last few tech trends combined. I’m talking bigger than AI, bigger than EVs, bigger than renewable energy and robotics too.

This is truly huge. And every single person I talk to who’s even remotely involved in finance is both excited and nervous.

They’re nervous because they know it could lead to the end of an era controlled by their big banks and hedge funds.

But they’re excited because they see the writing on the wall and are investing accordingly.

They’re not going to miss out on the profits this shift is all but guaranteed to create.

And I don’t want you to miss out on them either…

Coming Soon to an Inbox Near You

So I’ve been tirelessly researching the industry and its participants to pinpoint the best potential investments for massive profits.

And I’ve finally finished my research. I’ve identified a company on the verge of completely disrupting this $20 trillion-plus industry.

It’s also on the verge of delivering potentially life-changing gains for early investors.

I’ve got a full report that I want to send you, but I’m still putting the finishing touches on it.

It’ll be ready to go later this week, however. And I want you to keep your eyes out for my email.

Because this company is poised to skyrocket. And I want you in BEFORE that happens.

So keep an eye on your inbox. I’ll be sending that report out to you the second it’s ready.

You won’t want to miss a word and you’ll want to read every one immediately.

To your wealth,

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Jason Williams

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After graduating Cum Laude in finance and economics, Jason designed and analyzed complex projects for the U.S. Army. He made the jump to the private sector as an investment banking analyst at Morgan Stanley, where he eventually led his own team responsible for billions of dollars in daily trading. Jason left Wall Street to found his own investment office and now shares the strategies he used and the network he built with you. Jason is the founder of Main Street Ventures, a pre-IPO investment newsletter, and co-authors The Wealth Advisory income stock newsletter. He also contributes regularly to Wealth Daily. To learn more about Jason, click here.

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