But so far, the reality has mostly involved financial speculation with popular cryptocurrencies like bitcoin BTCUSD, +1.69% and dogecoin, DOGEUSD, +1.68% which soar and plunge with alarming regularity.
So what are cryptocurrencies and blockchain good for?Chamber of Digital Commerce's Perianne Boring and Neha Narula of MIT Media Lab explain central-bank digital currencies and what their emergence means for crypto and fiat money.
As an expert on emerging technologies, I believe that decentralized finance, known as DeFi, is the first solid answer to that question. DeFi refers to financial services that operate entirely on blockchain networks, rather than through intermediaries such as banks.
But DeFi comes with a host of risks as well that developers and regulators will need to address before it can go mainstream.
News: SEC’s Peirce warns regulator is ‘struggling’ with how to approach DeFiWhat is DeFi?
Traditionally, if you want to borrow $10,000, you first need some assets or money already in the bank as collateral.
A bank employee reviews your finances, and the lender sets an interest rate for the repayment of your loan. The bank gives you the money out of its pool of deposits, collects your interest payments and can seize your collateral if you fail to repay.
Everything depends on the bank: It sits in the middle of the process and controls your money.
The same is true of stock trading, asset management, insurance and basically every form of financial services today. Even when a financial technology app such as Chime, Aff...