Perspective by: Mark Jones, founder of Hana Wallet
It’s often overlooked that the first emails were exchanged between US college professors aiming to collaborate and share files in the early 1970s. Initially, these emails were sent through a closed system on the ARPANET using the File Transfer Protocol.
This process was slow, complicated, and labor-intensive, which limited its adoption to Ivy League institutions and government research facilities.
Web browsing only gained traction with the advent of the Hypertext Transfer Protocol (HTTP), which tackled usability challenges.
Present-day DeFi protocols mirror their Web2 counterparts in being complex and defended by followers who resist engaging with traditional financial services (TradFi). While it’s understandable why crypto advocates critique TradFi, particularly after the 2008 crash, this stubbornness hinders progress and limits DeFi’s potential.
Collaboration between DeFi and TradFi
If leaders in DeFi and TradFi were to collaborate, we could look back on this era as a pivotal moment akin to the rise of web browsing in the 1990s — when digital asset services dismantle barriers between TradFi and DeFi platforms, facilitating widespread adoption.
Related: Will Robinhood’s tokenized stocks genuinely take over the world?
Though it may be hard to envision, a viable route exists that involves traditional payment service providers (PSPs) integrating crypto, allowing users to directly link a Mastercard to onchain liquidity. This hybrid model marries the efficiency and programmability of digital assets with the global reach of established payment networks, making crypto usage in daily life increasingly straightforward. It’s not about choosing between TradFi and DeFi; it’s about combining both to create the user experience people desire.
Individuals need to send their digital assets to a public key linked to their debit card, enabling them to use cryptocurrencies anywhere Mastercard is accepted. While this concept may seem minor, it represents a significant bridge between niche digital assets and mainstream financial services, offering a real opportunity to expand DeFi and provide financial access to billions of unbanked and underbanked individuals.
The misplaced focus on use cases
In the past 16 years, a multi-trillion-dollar asset class has materialized, but only a small fraction is utilized in the real economy. Most use cases revolve around remittances, with minimal application beyond cold storage or speculation. This lack of utility stems largely from the insular systems built on mutual distrust between the DeFi and TradFi communities, which prevent popular cryptocurrencies from reaching their full potential.
By linking digital assets to TradFi, the barriers that have restricted their use can be dismantled. Debit cards associated with digital assets can integrate into existing PSP frameworks, unlocking their potential. While this may seem like a distant goal, past technological advancements have occurred rapidly once usability issues were addressed. Future Web3 economies will require overcoming data silos, walled gardens, and a reluctance to engage with traditional stakeholders.
By setting aside ideological differences, DeFi and TradFi can accomplish far more than currently possible. Enhanced collaboration with existing infrastructure partners can accelerate the development of innovative payment industry products, improve existing systems, and expand access for billions of unbanked or underserved individuals.
This doesn’t need to be a zero-sum competition. Cooperative efforts leveraging existing infrastructure can break down barriers, yielding mutual benefits for all parties involved.
Historically, crypto enthusiasts have built intricate systems within isolated environments as a reaction to TradFi failures. These pioneers have achieved significant financial and technological advancements.
Now is the time to move beyond ideological divides that hinder mainstream acceptance.
Perspective by: Mark Jones, founder of Hana Wallet.
This article is for informational purposes only and should not be construed as legal or investment advice. The views, thoughts, and opinions expressed here are solely those of the author and do not necessarily reflect the views and opinions of Cointelegraph.
