In December 2021, a partnership was formed between decentralized finance (DeFi) company Earnity and Bitcoin mining firm BitNile. Earnity co-founders Domenic Carosa and Dan Schatt expressed excitement for the venture, as it can help DeFi products and protocols be more widely available and understandable.
Earnity’s Domenic Carosa and Dan Schatt Discuss Risks in Financial Systems
However, many people still hesitate from going into the DeFi space because of the perceived risks in security. It is essential to know that in the world of traditional finance, several risks will always come with investing. For one, there is the potential for market fluctuations that can lead to losses. Additionally, there is always the possibility of fraud or theft when investing in traditional financial products. Finally, there is the risk that companies may go bankrupt, leading to investors losing their money.
DeFi provides an alternative that allows people to transact and invest in a less risky vehicle than traditional banking or investment services. There are various reasons why DeFi is seen as more secure.
For one, the absence of an intermediary, such as a bank, insurance center, or clearinghouse reduces the possibility of human error, negligence, and misconduct in financial transactions. For example, in traditional financial systems, there is the chance of a bank’s credit committee approving a risky loan that should not have been made in the first place or discrimination taking place in bank transactions or applications.
Decentralized Technology Vs. Human Fallibility
A properly decentralized technology system reduces the risk of human fallibility, leaves no room for the willful execution of misdeeds, and has no desire to enrich itself illegally. With correctly programmed algorithms and the appropriate use of technology, DeFi can help solve a ton of risks in the financial system.
Earnity, Making DeFi Simpler
Although DeFi may appear more volatile and complicated than the tried-and-tested traditional financial system, educating users can offer a solution. Domenic Carosa, Dan Schatt, and the rest of the Earnity team intend to address these matters by creating a platform and marketplace that will allow users to transact in a simple manner and learn about the DeFi system through a like-minded community.