Time for a Financial reality check

Let’s have a real talk about the traditional banking system: at the end of the day it gets the job done, but you can't help thinking there's got to be something better out there (spoiler: there is).

It often feels like a journey through a maze – complex, and often overwhelming. It's about jumping through hoops for basic financial services, where the doors seem to open easier for some than others.

Then, there's the matter of fees and time. If you ever made a cross-border wire transfer (or sometimes, even an internal/national one), you know what I’m talking about… One, two, maybe five business days to get it done, and with ridiculously high fees.

On top of that, according to data from the World Bank, there are an estimated 1.4 billion (!!!) unbanked people worldwide.

So yeah, in this modern era, where everything else is speeding up, traditional finance still lags behind.

Here are the core issues with traditional banking and finance:

💸 Limited accessibility: Gaining access to financial services is often an uneven playing field.

💸 Glacial pace: Some processes can take several (business) days. And that’s when it’s approved.

💸 Fees, fees, everywhere: Hidden costs and unexpected fees? More common than you'd think, and they REALLY add up.

💸 Top-heavy system: The scales often seem tipped in favor of big entities, leaving the average individual feeling sidelined. Surprise: It is.

If the problem is not clear yet, there’s a video that perfectly sums up everything I’ve said so far:

So I guess we all agree that the traditional finance system, for all its merits, has areas that need rethinking and upgrading.

Today, we’ll explore what's next on the horizon.

DeFi unleashed: Revolutionizing finance in Web3

Now, let’s turn the page and dive into how Web3 is changing the financial game - time to talk about DeFi or Decentralized Finance.

DeFi is all about breaking free from the traditional chains. It operates on blockchain technology – yes, the same backbone behind things like cryptocurrencies and NFTs for instance.

Think of DeFi as a financial ecosystem that runs without any central authority like banks or traditional financial institutions. Here, everything runs on decentralized applications (dApps). These are not your usual banking apps; they are platforms running on blockchain that let you lend, borrow, trade, and invest directly and securely.

A quick example: it’s possible to earn interest on your digital assets or get a loan without the long lines and endless paperwork. Or even swapping your Ethereum or Bitcoin from/to US dollars with a few clicks, and without having to show your ID → That’s DeFi in a nutshell.

One of the coolest things about DeFi is the way it makes financial services more accessible and affordable.

There’s no middleman to hike up the fees or make you wait. Plus, with DeFi, you have complete control over your assets: You’re the boss, managing your funds directly through blockchain technology.

But it’s not just about ease and control. DeFi is also about transparency and security. Every transaction is recorded on the blockchain, so it’s like having an open book of all activities – something traditional finance can’t always offer.

To put it simply, here's why DeFi is turning heads:

🎯 Direct and Decentralized: DeFi provides a direct line to financial services, bypassing traditional intermediaries.

🎯 Non-Stop Service: It operates round the clock, offering uninterrupted access to financial services.

🎯 Transparent Operations: Transactions in DeFi are recorded on the blockchain, ensuring clarity and traceability.

🎯 Enhanced Security: Leveraging blockchain, DeFi enhances the security of financial transactions.

🎯 Universal Access: DeFi breaks down geographical barriers, offering global access to financial services.

I tend to say that DeFi is a cornerstone of the Web3 evolution, offering a more equitable, transparent, and efficient financial system.

It represents not just a change, but a complete reimagining of how we interact with finance.

Spotlight: Automated lending

In today’s “Spotlight”, instead of showcasing a specific brand or company, we’ll explore one of my favorite things about decentralized finance: Automated lending.

Imagine lending or borrowing money without the lengthy paperwork, bureaucratic hurdles, or even a bank in the traditional sense.

Instead, these processes are handled by smart contracts on blockchain platforms like Ethereum, Polygon, or Solana. These smart contracts are programmed to automatically execute lending agreements. We are talking about a financial system that’s always awake, always ready, without the traditional banking hours.

One of the coolest aspects of automated lending is its accessibility. It breaks down barriers in the financial world. It’s open, transparent, and operates on pre-set rules that everyone can see – leveling the playing field for borrowers and lenders alike.

“But Mr. Pink Beanie, since there’s no Bank involved, is it secure?”

FUC*ING YEAH!

Thanks to blockchain, every transaction is recorded transparently. This means less room for errors and disputes. For those lending their assets, they get to earn interest, and borrowers can access funds without the red tape that usually comes with bank loans.

Looking at the bigger picture, automated lending isn’t just another feature in the DeFi ecosystem.
At least the way I see it, it’s a pivotal part of its growth. It represents a more inclusive financial future where people have more control and visibility over their financial transactions.

It’s taking the principles of DeFi – decentralization, transparency, accessibility – and applying them to one of the most crucial aspects of finance: lending.

In summary, automated lending in the DeFi space is a step towards a more equitable financial system. It’s about making finance more democratic, where your ability to lend, borrow, and earn isn’t dictated by traditional gatekeepers.

The Web3 Wave:
Businesses x Decentralized Finance

So by now, you may be thinking:

“All this sounds really cool. But what’s in it for businesses?”

DeFi - despite what many people think - are not just about flashy tech or complex jargon. It's about giving businesses a real edge in the financial playground.

Think faster, smarter, and more secure transactions – that's what DeFi brings to the table.

Imagine handling your business finances (or at least part of them) without the usual headaches. Think instant payments, lower (or non-existent) fees, and maybe the most important thing:

24/7/365 - IT NEVER STOPS

Since transparency is also key in business, having the blockchain as a ledger makes every transaction transparent, building trust with your clients and partners. Once a transaction is confirmed, all of its details are registered and are now unchangeable.

Optimizing budgets is another crucial factor for any business, big or small. DeFi steps in by kicking out the expensive middlemen. Funds go from A to B and can be easily verified.

RWA (Real World Assets) Tokenization:

And let's not forget about tokenization. We have explored this subject in several past editions, but I recommend you check #3, #7, and #10 (yes, I love this topic 😅).

In case you didn’t check those past editions, here’s your TL;DR: The tokenization of real-world assets (RWAs) like real estate, gold, fashion, loyalty programs, or art introduces a new era of accessibility and global investment. It moves us from paper deeds to blockchain records, enabling fractional ownership and unlocking innovative financial possibilities.

Blockchain and smart contracts are pivotal in RWA tokenization, providing security and transparency. They allow fractional ownership and create secondary markets, enhancing liquidity and democratizing high-value asset investments.

In DeFi, RWAs bridge traditional finance and decentralized systems, offering stability and innovative financial models. This integration facilitates new lending and borrowing mechanisms, akin to traditional mortgages but executed on the blockchain.

So from a business perspective, tokenization can open multiple opportunities, including project funding, verifiable ownership for collectibles, digital twins, and SO MUCH MORE.

2024 and beyond: Expanding Tokenization

Looking into 2024, the trend of integrating traditional assets onto blockchain platforms is set to expand. The growing popularity of tokenized treasuries signals a broader move towards tokenizing diverse asset classes, offering a more inclusive and efficient financial ecosystem.

You’ll certainly see me talking a lot about this topic next year 😄 

Cash, credit or debit card… AND CRYPTO!

If you don’t want to take a huge step and dive into things like Tokenization right now, you/your business may start accepting crypto as a payment method as a way to get used to dealing with this new reality.

And believe me, many big players have already entered this arena.

By integrating digital currencies alongside traditional payment methods, brands are opening doors to a tech-savvy, forward-thinking customer base that values innovation and flexibility.

I see this type of move as a strategic decision to broaden market reach and resonate with a consumer segment that thrives on the cutting edge of digital advancements.

Here are a couple of recent examples:

Ferrari's Crypto Move

The iconic Italian carmaker's decision to accept crypto in the U.S. is a major nod to the growing influence of digital currencies in the luxury market. It’s a forward-thinking approach, recognizing that many of their clients, from savvy young investors to seasoned financial players, are invested in the leading crypto 🏎️💥.

Ferrari’s strategy goes beyond the U.S. borders, eyeing an expansion into Europe and other crypto-friendly territories. So more than merely adding a payment option, Ferrari is tapping into a customer base that's well-versed in the digital economy.

Gucci dives into crypto: Embracing ApeCoin

Gucci's decision to accept ApeCoin at select U.S. stores back in 2022 was a bold statement in the luxury retail scene. This step into the world of Web3 even when “numbers were down” illustrates Gucci’s readiness to merge luxury fashion with the latest in digital currency trends. 🛍️🎩

(By the way, our edition #12 was dedicated to Web3 fashion)

This initiative is part of Gucci's broader strategy to stay at the forefront of innovation and digital transformation. By aligning with the Bored Ape Yacht Club’s cryptocurrency, Gucci actively engaged with one of (if not THE) most well-known Web3 projects.

So there you have it: two examples from some of the world’s most famous brands that decided to add cryptocurrencies as an alternative to traditional payment methods.

There are MANY others, but hopefully, this will help you understand that DeFi, crypto, and other “Web3 buzzwords” go much further than our bubble.

From Cookies to Wallets:
Challenges and opportunities

Amongst many other things going on in the Web3 environment, there’s one that MANY people seem to still ignore - we're are moving from the era of cookies to the age of digital wallets.

This may still take some time before hitting mainstream but has the potential to revolutionize how businesses and consumers interact in the digital space.

“But why should I care?”

For starters, digital wallets offer a level of engagement and interaction far superior to traditional cookies. They enable businesses to establish a more direct and personalized connection with their audience. Unlike cookies, which often feel like an unseen force tracking your digital footprints, wallets provide a transparent and consent-based interaction. This transparency is a win-win, enhancing trust for users and giving businesses a clearer insight into their customer's preferences.

“So why are more businesses adopting this right now?”

This shift isn't without challenges - and that must be said.

The most significant hurdle lies in the user experience and onboarding process. To fully harness the potential of digital wallets, the onboarding process needs to be as smooth and intuitive as possible. It's crucial for businesses venturing into Web3 to prioritize user-friendly interfaces that make transitioning from traditional platforms to blockchain-based systems seamless and hassle-free.

Despite these challenges, the opportunities are immense. Digital wallets in the Web3 ecosystem open doors to innovative business models, deeper customer engagement, and a level of data control and privacy that was previously unthinkable. They mark a significant step towards a more decentralized, user-empowered internet.

And since we are talking about Finance in the Web3 context, imagine the possibilities brought by an environment where the “new cookies” are also the very thing users interact with to make payments - their wallets.

Shout-out:
Oana Leonte and her Unmtchd. Podcast.

I recently had the pleasure of talking to my good friend Oana Leonte 💬 about:

1. My personal story, background, and career path.

2. How spending my whole life pivoting and risk-taking made me successful.

3. The current state of Web3 and the Metaverse

4. The Future of digital interaction and branding

5. My mantra and Personal Philosophy in life and business

I must say that I have never shared as much about myself in any of the 100+ podcasts I have been to 😅.

And by the way, in case you haven’t already, I recommend you subscribe to her newsletter:

Stay safe:
Not your keys, not your coins

When it comes to owning crypto, there's a very famous saying: "Not your keys, not your coins". It's a simple, yet deep mantra that resonates with every crypto enthusiast out there. Let's break it down and see why this is a big deal.

You're the bank, which is great. But you are the bank, which may be bad.

Think of self-custody in Web3 as having the ultimate control – like being the CEO and the security guard of your own bank.

The perks? You control 100% of your funds, calling the shots on every cent. But here’s the real talk – it's a double-edged sword. Yes, you've got the power, but you've also got all the responsibility.

Lose those keys, and it's like throwing your bank vault into the ocean – inaccessible and gone for good.

(Yes, there are solutions out there that aim to reduce the risk involved, which is important specially for business, but as a rule of thumb: KEEP YOUR WALLET SAFE)

Whenever you decide to connect your wallet to a website or approve a transaction, be ALWAYS 100% sure that you trust the platform you are interacting with.

An alternative to that is the CEX (centralized exchanges), which might even pay you high interest rates to “keep” your coins. So as long as you “feel safe” and are making extra bucks, all good.

But if the platform shuts down, good luck on getting your money back. Well, not “YOUR” - because in the end, if you don't hold your keys, you don't truly own your coins.

cof cof… CELSIUS… cof cof FTX…

So in short: Before you truly understand how a DeFi platform works or how to manage a crypto wallet, I recommend you only use the money you are willing to lose OR that you see this money as a “crash course”, in the sense of in the worst case, you learned a lesson.

In the meantime, watch videos on YouTube, join communities, and ask away (you know where to find me).

I’m sure that once the self-custody bug bites you, you won’t come back.

(I have been bitten a long time ago…)

Bitcoin: My personal hedge in an unpredictable world

You've probably realized by now that Web3 finance isn't just about snagging some random tokens and crossing your fingers.

There's a whole universe of practical applications out there. And since we are in the “walking the talk” section, here's a slice of my life:

For the past few years, I’ve been quietly stacking fractions of Bitcoin, regardless of its price. “Why?” you might ask. Well, in these times of sky-high inflation, economic uncertainty, and, let's not forget, unpredictable world politics, having a decentralized stash feels like holding a shield. It's my way of playing it smart (or crazy, depending on who you ask) in safeguarding my future in a currency that no one can freeze or seize. It’s about having control in a world that’s often uncontrollable.

Lessons from the past: Why I’m betting on crypto

Now, coming from a country with a history of financial instability, where people have seen their hard-earned savings frozen by government decisions, you start to think differently about security and control.

And for me, that alternative has been crypto. By leaning into Bitcoin and decentralized finance, I’m taking a stand for financial freedom and security. It’s a personal strategy, shaped by past lessons and a keen eye on the future.

Maybe it’s not for everyone, but for me, it's about being proactive in a world that doesn’t always play fair. 🚀👊

DeFi: The future of finance or just a fad?

As I mentioned above, I have been building my hedge against an uncertain future with Bitcoin. Besides that, I have even accepted crypto payments in some of the advisory projects I have taken part.

On top of that, I frequently use DeFi platforms for different purposes, so my take on decentralized finance should be very clear by not.

However, I am truly curious: what's YOUR take? Is DeFi the future of finance, or just a passing trend in the Web3 space?

I’ve put together a couple of polls. Your responses will help us have a better view of The Wild West of Web3 audience’s instance on DeFi 🤝.

(you may have to access a different tab to reply to this poll - and I truly appreciate it if you could do that)

Your insights are invaluable, and who knows? Your thoughts might just spark our next big topic. So, let's get those votes rolling in!

⚠️ ⚠️⚠️⚠️

As we near the end of this edition, I want to emphasize a crucial point:

We've talked about topics like lending, banking, fees, and the dynamic world of DeFi, but remember:

It's all about sharing knowledge and insights. This is NOT financial advice. When it comes to your own financial path, please always do your own research and make informed decisions.

Here at The Wild West of Web3, we're all about learning and exploring together, not guiding your financial choices. Stay informed and stay safe.

⚠️⚠️⚠️⚠️

See you soon.

#LFGrow
Diego Borgo