Opinion by: Mark Jones, founder of Hana Wallet
The first emails were exchanged by US college professors in the early 1970s for collaborative work, using a closed system over the ARPANET via the File Transfer Protocol.
This method was slow, convoluted, and time-intensive, leading to its limited adoption outside Ivy League universities and government research facilities.
Web browsing only gained traction after the creation of the Hypertext Transfer Protocol (HTTP), addressing usability issues.
Current DeFi protocols echo their Web2 predecessors’ complexity and are often managed by proponents who resist engaging with traditional financial services (TradFi). While their skepticism is understandable, considering the 2008 financial crisis, their rigid stance hinders the advancement and potential of DeFi.
DeFi and TradFi together
If leaders from both DeFi and TradFi choose to collaborate, we may soon reflect on this era as a pivotal moment akin to the rise of web browsing in the 1990s—when barriers between TradFi and DeFi dissolved, paving the way for broader adoption.
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Although it’s difficult to envision, pathways already exist wherein traditional payment service providers (PSPs) integrate crypto, allowing users to directly top up a Mastercard using on-chain liquidity. This hybrid model merges the efficiency of digital assets with the expansive reach of standardized payment networks, facilitating real-life crypto usage. The goal isn’t simply to choose between TradFi or DeFi, but to fuse them for a desired user experience.
Users can send digital assets to a public key linked to their debit card, then utilize their cryptocurrencies wherever Mastercards are accepted. While it might seem minor, this connection between niche digital assets and mainstream financial services offers a genuine opportunity to grow DeFi while providing financial access to the billions without banking services.
The use case focus is wrong
Despite the emergence of a multi-trillion-dollar asset class in just 16 years, a mere fraction is utilized in the real economy. Most current use cases center around remittances, with limited applications beyond cold storage or speculation. This lack of practical utility stems largely from the mutual distrust between the DeFi and TradFi communities, which limits cryptocurrencies’ potential.
By linking digital assets to TradFi, prior barriers preventing asset utilization can be dismantled. Debit cards linked to digital assets can leverage existing PSP frameworks and unlock true potential. Remarkably, revolutionary technological advancements have occurred within shorter timeframes when usability challenges were resolved. Future Web3 economies will require setting aside data silos, walled gardens, and unfounded distrust of established interests.
By moving past these ideological divides, DeFi and TradFi can achieve far more together. Enhanced collaboration with current infrastructure can accelerate the development of new payment products, improve existing structures, and scale operations, reducing costs for the billions who still lack adequate financial services.
This does not have to result in a zero-sum competition. Through cooperation and leveraging existing frameworks, both sectors can eliminate barriers and collectively benefit everyone involved.
For far too long, crypto advocates have created intricate systems within closed ecosystems as a reaction to TradFi’s failures. These trailblazers have achieved remarkable financial and technological feats.
It’s time to move beyond the ideological rifts that obstruct mainstream adoption.
Opinion by: Mark Jones, founder of Hana Wallet.
This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
