How Decentralized Finance Is Changing Money
In many ways, fiat money is causing more harm than good. This decentralized finance doesn’t reflect the value of anything physical. Instead, its value is determined by governments and central banks, which leads to an unfair dilemma in the financial world.
Most of the modern-day currencies, like USD, Euros, Pounds, and Rupees, are all fiat currencies. That explains why there’s such inequality among currencies around the globe.
In this article, we delve a bit deeper into the topic and discuss how decentralized currencies have the potential to change the world of finance.
Decentralized Finance: Fiat money and inequality
According to Forbes, “Inequality is the child of fiat money”. As fiat money isn’t backed by the value of any physical commodity, gold, for instance, its value could vary wildly. The stability of the government that issues fiat money, as well as the supply and demand, determines the value of a certain fiat currency. The central bank controls how much fiat money can be printed at a given period, giving them greater control over the country’s finances.
Needless to say, this approach of money being controlled by governments and a few high-powered entities doesn’t do justice to the common people. Your money’s worth reduces over time due to inflation, and if a government issues to print more than necessary money, it might even result in hyperinflation.
Loans, and the intervention of DeFi
Decentralized finance, abbreviated as DeFi, is going to liberate the finance world from the claws of centralization. DeFi connects the transacting parties directly, without needing a middleman to conduct the transaction. This approach neglects the need to have a centralized system, based on a bank or a government.
This technology allows for direct, peer-to-peer loans from one entity to another. This approach makes it possible to minimize interest rates for the borrower, and also make the transaction more profitable for the lender at the same time. Thanks to the neglect of middlemen, the public enjoys the best financial values.
Furthermore, a decentralized system doesn’t discriminate against people on the basis of their credit scores. Instead, anyone can take a loan from someone else based on the decentralized platform known as P2P Lending.
The destroyer of the wealth gap?
Due to its decentralized approach, DeFi has been closing the wealth gap among the masses. Furthermore, it allows for lower-middle-class individuals to save up on their expenditures due to minimized middleman fees. As food producers start to earn more through the likes of crypto payments and Afro tokens, they eventually save themselves from an unstable financial future.
The bottom line
At Esca, we have developed a system to allocate more financial resources to hardworking food producers. Chefs can now earn more without having to increase their food production and man power due to the power of our decentralised food platform.
In the end, Esca Menu aims to contribute positively to the quest of decentralizing global finances, while giving more opportunities to food producers and consumers enabling then to become more financially stable.