According to the creators, today’s banking system is discriminatory as it puts all power in the hands of the banks and regulators where the small guy is on the mercy of the system and has no influence. So, a system was imagined that would have no central authority and would work person-to-person and would enable use of funds without requirement of any entity.
Immediate and urgent settlement of a transaction instead of waitng for a payment system to respond with requirements of thousands of compliance.
Store of Value
Crypto has gone from strength to strength and is now considered akin to Gold as a store of value. The argument is that crypto is not impacted by inflations and is a better store of value increasing in value over time.
All currencies across the world have lost value over time given the impact of inflation. For example, with bitcoin it is argued that its supply mechanism will restrict inflation given that the supply is restricted to only 21 Mn coins. Of-course price volatility has led many to question this premise. However, this is still an evolving space.
Lending & Borrowing
Credit ratings, bank processes etc., have made it tough for people to borrow through the formal mechanism. What if you could get a loan digitally, without even having to fill a single form or sign a contract? That’d be amazing, right?
Decentralized finance applications seek to remove the “middleman” from the lending and borrowing process.
They allow individuals to lend and borrow funds almost instantly using cryptocurrencies. In addition, as cryptocurrencies are borderless currencies, you can lend or borrow from these platforms irrespective of where you live.