DeFi to Disrupt Traditional Finance – Crypto.com and BCG

2020 is indeed the year of DeFi as there is a rapidly increasing interest in the Decentralized Finance (DeFi) sector.

In line with this interest, Crypto.com and Boston Consulting Group (BCG) have published a report covering details of the DeFi space. The report furthermore highlighted the possibility of totally revamping already existing traditional finance systems.

Over the past few months, the DeFi ecosystem has grown exponentially. Its value increased by about 1500%, giving it a total valuation of $8 billion. The picture below shows the total value of USD locked in DeFi from October 2017 to date.

This steady rise in DeFi prices and values have attracted the attention of analysts worldwide. Said analysts are trying to determine DeFi’s effect on traditional finance systems. Crypto.com and BCG, however, took the bull by the horn and have published a report analyzing the effect DeFi could have on conventional financial systems.

We recently covered details of the DeFi report on the Altcoin Buzz YouTube page.

The report in detail

The report, tagged “The Sudden Rise of DeFi: Opportunities and Risks for Financial Services,” examines DeFi growth. The conditions that foster the growth of the DeFi industry were especially examined. The report points out the possibility of the DeFi ecosystem rendering traditional financial systems obsolete. The report, however, also includes potential downsides of DeFi. One of these downsides includes the current challenges of blockchain technology like its high network fees, security issues, and regulatory constraints. Other challenges include the consolidation of most DeFi protocols on the Ethereum network, limited liquidity, and over-collateralization of loans.

SMEs, DeFi, and CeFi

According to research by the European Parliament, SMEs (small and medium-sized enterprises) account for over £7 trillion in the EU economy. There are also over 24 million SMEs in Europe alone, most of which are under-banked. CeFi, simply put, is impeding the growth of SMEs with its subpar financial services. The report by Crypto.com and BCG revealed that DeFi is a worthy substitute for CeFi, despite that many schools of thought see DeFi as a death sentence for centralized finance (CeFi) institutions.

Together, both platforms will help current financial service giants build resilient, relevant, and reliable financial solutions.

Speaking on the announcement, Kris Marszalek, co-founder and CEO of Crypto.com, disclosed that their DeFi research went beyond just the surface success stories. He explained that they carefully analyzed the reason for its growth and its ability to disrupt current traditional financial systems. He further disclosed that the report contains both Crypto.com and BCG’s “expertise to deliver a comprehensive side-by-side comparison with incumbents in traditional finance”.

Kaj Burchardi, managing director with BCG, said that despite different companies’ attitudes to DeFi, they will need to understand its impact. This is especially true in the case of customers’ increasing need for autonomy. He stated, “By partnering with Crypto.com, we have been able to advise companies with an honest appraisal on DeFi, giving them the tools to make informed decisions on its adoption.”

About Crypto.com and BCG

Founded in 2016, Crypto.com’s sole aim is to provide people all over the globe with complete autonomy of their funds. With more than three million users globally, the platform serves as a better substitute for conventional finance systems. It is also the first crypto company to receive ISO/IEC 27701:2019, CCSS Level 3, ISO27001:2013, and PCI:DSS 3.2.1, Level 1 certifications.

Founded in 1963, Boston Consulting Group (BCG) is known for its partnerships with top industry players. It proffers solutions to challenges facing these firms and helps position them for better opportunities.

BCG furthermore advocates that to succeed, organizations must combine digital and human abilities. 

Previously, Altcoin Buzz published a 2020 review of Crypto.com.