If you've followed developments in the cryptocurrency world by scanning headlines on the topic, you could be forgiven if you held one of two divergent opinions. The first is that cryptocurrencies are the new gold that's making millions of people rich and allowing them to detach from the world of legacy banks and fiat currency. The second is that cryptocurrency is a niche product that's been all potential and no delivery – something that techies the world over obsess about but that really shouldn't matter to everyday people.
The truth of the matter is, however, somewhere in between those two.
You see, cryptocurrencies have made a whole lot of people rich (and quite a few people poor, too). And at the same time, cryptocurrencies have mostly failed to break through to the mainstream. At one time, for example, you could walk into a variety of stores and make purchases using cryptocurrencies. But the market's inherent volatility has caused payment processors to abandon the acceptance of cryptocurrencies in droves. In other words – it's too hard for everyday people to actually use cryptocurrencies for anything.
So, it's fair to say that both views of the world of cryptocurrencies are valid and true simultaneously. But for outsiders, that's a difficult reality to understand and accept. And that's the crux of what's holding cryptocurrencies back. They're still complicated and lack compelling use cases in the real world. But that may not be true for much longer.
Right now, there's a growing sector of crypto development that's aimed at producing products suited for mainstream use. They're coming together under the umbrella of what's called decentralized finance (DeFi) services. Without getting into too many technical details, suffice to say that many of them are crypto-equivalents of well-understood financial services and instruments.
Their goals (besides making money) are to provide alternatives to necessary financial services that big banks and other institutions have come to dominate. And they're gaining so much traction that it's looking more likely that we're approaching a day when cryptocurrencies might actually live up to all of the hype they generated back in the heady days of the early 2010s. Here are some examples that prove the point.
Right now, person-to-person and business-to-business lending is one of the most important areas of DeFi development. Some of the most well-known crypto-projects today revolve around offering such services. One of the most well-known (and valuable) among them is Maker. It's a platform that, among other things, allows holders of the Ethereum cryptocurrency to leverage their assets by lending them out to borrowers for a variety of purposes. What makes Maker so interesting is that it makes use of a coin, called Dai, that's pegged to the US dollar on a 1:1 basis. That means it sidesteps the volatility that has handicapped the usefulness of other cryptocurrencies in the past.
And Maker's not alone in the space. Other competitors, like Aave and Compound, offer innovative lending and interest-generating services for investors and borrowers alike. Together, they're all forging ahead in creating a diverse and useful crypto lending market that might one day rival the power and asset size of the world's biggest banks and financial institutions. But more importantly, they offer people a choice they've never had before.
I mentioned earlier that one of the major stumbling blocks to crypto's adoption in the mainstream is the fact that it's so hard to use it in the real world. Between high fees and a dearth of places that accept it as payment, it's become impractical to use crypto as a substitute for fiat currency. But the world of DeFi has a project that's trying to fix that, too. It's called TrustSwap, and it owes its very existence to the realization that there are too many traditional financial transactions that crypto wasn't set up to handle.
Its CEO, Jeff Kirdeikis, ran headlong into that reality when he went looking for a way to space out investor purchases of a crypto token from a project he was helping to develop. With no existing solution available, he set out to create one. The result was a DeFi platform that provides time-locked crypto transactions (like business payroll services), escrow services for OTC asset swaps, and even a subscription service that might one day make it possible to pay for your Netflix subscription in your cryptocurrency of choice.
If any or all of those services gain traction – and the early results have been good – it may be about to get much easier to use cryptocurrencies for all kinds of transactions. It would eliminate one of crypto's biggest weaknesses at long last.
What's most exciting about all of this is that we could be approaching a day when cryptocurrencies become an everyday part of the financial landscape. That means the average person might be able to tap into that awesome wealth-building power they've been hearing so much about from the crypto evangelists and live a life of leisure, filled with games. And they'll be able to do it using financial tools and vehicles that they already understand. It would be a true merger of the two faces of the cryptocurrency revolution mentioned earlier in this article – and a sign that the promise of cryptocurrencies was finally going to become a reality for everyone, and not just the most technically-savvy among us. And wouldn't that be nice for a change?