There are some challenges that lie ahead for DeFi’s proliferation.
Even though it could transform the lives of millions of people, it’s an inescapable fact that DeFi solutions have failed to gain public awareness. Adoption in the crypto world has been modest to say the least — and according to a study published by the Cambridge Centre for Alternative Finance back in December 2018, there are just 25 million verified crypto users worldwide. When compared with the 1.7 billion unbanked people we were talking about before, it’s clear there’s a lot of work to be done.
It’s also worth remembering that even if DeFi applications manage to welcome hundreds of millions of people to its platforms, the public blockchains they rely on may lack the capacity to accommodate their demands. Visa claims it can process in excess of 24,000 transactions per second — dwarfing Bitcoin, which is capable of seven TPS, dramatically. Scalability concerns have also been a long-running thorn in the side of Ethereum, with its co-founder, Vitalik Buterin, recently admitting that the blockchain is almost full.
Volatility in cryptocurrencies is yet another concern — and even though stablecoins have been seeking to remedy this, the hurdle of regulatory compliance continues to loom large. Facebook unveiled ambitious plans to launch a stablecoin called Libra this year, but the social network has faced staunch resistance from American politicians, regulators and financial institutions. Lawmakers have expressed concern that it could undermine the U.S. dollar and throw the global economy into disarray, while banks fear it could create a “shadow banking” system.
Credit: Source link