Ever since Bitcoin gained popular notoriety its detractors often brought up concerns about the decentralised coin’s usage in illegal activities. Bitcoin was anonymous, not controlled by one specific bank or organisations, and came from being used on the dark web.
Banks were one of the bigger detractors of Bitcoin as they called for more regulation, control and a stop to Bitcoin’s use in money laundering, illegal buying, and even terrorist funding. However, there have been major revelations about the banking sector thanks to the FinCEN files.
These files from the U.S. Financial Crimes Enforcement Network (FinCEN), have shown several top banks failed to instantly report more than 2,100 suspicious activity reports. The bulk of the dirty money (approximately $1.3 trillion) moved through Deutsche Bank.
Other prominent banking institutions, such as JPMorgan, Standard Chartered Bank, and HSBC, also kept processing suspicious transactions from criminal players.
Suddenly, it appears that the banks are not as clean as they like to claim and even with all the regulations, illicit activities have managed to slip through.
In a time where the traditional financial space is under pressure thanks to advancements in technology as well as the pressure of Covid-19, this is another hammer blow that will lead to many more people looking away from traditional finance and perhaps towards Bitcoin and blockchain finance — perhaps even DeFi.
Is Bitcoin ready?
So, while the traditional financial space starts to feel the pinch, and the banks again are getting their reputation tarnished, the question that arises is if Bitcoin is ready to be the next best thing. Bitcoin offers many solutions, and potential, but it is about releasing if these solutions can be realised.
To truly understand the blockchain financial ecosystem, there is DeFi to consider — and this becomes a good case study to determine if cryptocurrency could be a future useful tool to supplement traditional finance and banking.
However, DeFi is in a space where it’s own potential to take up the reins from traditional finance is not being met. In fact, there is a big drive for greedy money making in DeFi which is actually crippling its potential.
The drive for DeFi is currently not on how it can overtake and better traditional finance, but rather on yield farming and concerning money making without regulation.
Regulation is key
DeFi is still too young and obscure to capture the attention of regulators, but it is gaining huge momentum, and gaining media attention. Much like the ICO craze, its rise was soon cut down by regulators as they realised there was a lot of poor business going on leaving investors losing money.
DeFi needs to focus on becoming mainstream, not on making individuals money, if it wants to fill a niche that is only getting bigger and bigger as traditional finance feels the pinch.