DeFi Is Recreating the Financial System, Says the President of Bianco Research

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DeFi Is Recreating the Financial System, Says the President of Bianco Research

Mar 4 2021

Image: Sashkin / Adobe Stock

In brief

  • The DeFi sector is buggy and it has a lot of issues, but this is to be expected from new technology.
  • Bianco noted that DeFi is working on improving itself and solving the problems that are troubling it.
  • He believes that DeFi will recreate the financial system, not unlike what ride-sharing did to taxi firms.

The president of Bianco Research, Jim Bianco, recently spoke about the DeFi sector and its potential to recreate the modern financial system, which he sees as work in progress, but also something that is very likely to happen.

The DeFi sector exploded over the past year, especially during the summer of 2020. Its growth continued in 2021, and the sector is much better-known these days. As such, it is already attracting the attention of some rather influential individuals and companies.

One example is Jim Bianco, a Bloomberg columnist and the president of Bianco Research. The Wall Street veteran seems to have been strongly intrigued by the DeFi sector, which is ‘recreating the financial system,’ as he put it.

Defi Can Do to Finance What Ride-Sharing Did to Taxi Firms

Bianco talked about DeFi at length during a recent video interview with Fox News. The interview, which took place this Tuesday, focused on how the DeFi is changing the modern financial industry. Bianco stated that DeFi has the potential to disrupt the current financial system in the same way that taxi firms were disrupted by the concept of ride-sharing.

He also gave other examples where new technology revolutionized older concepts, such as e-commerce disrupting retailing, or the internet itself, which disrupted newspapers.

For him — as well as many others — the decentralized finance sector presents a shift from traditional financial systems, which are centralized, to decentralized platforms, run by communities through blockchain technology.

Bianco recognized the growth that the sector has seen over the past 12 months, also referencing claims from DeFi advocates that say that DeFi can democratize finance. It does this by removing the middlemen, the intermediaries, such as lenders, exchanges, insurance firms, and others.

DeFi has Problems, But it is Evolving

Bianco doesn’t claim that DeFi is without fault, however. He understands that the sector is buggy, nascent, and that it has problems. But, this is understandable, considering that the sector is still very new. Of course, it has been around for a few years now, but it was mostly ignored by the broader crypto sector during this time.

The last year brought the change, and DeFi is now as new to the crypto industry as Bitcoin was in 2010. It is advancing faster, of course, but it still has a long way to go before it will be able to bring the change that it offers.

Still, Bianco recognized that DeFi is evolving, and that the issues that are currently bugging it will be solved in time.

Bianco’s Interest Goes Beyond DeFi

While DeFi is certainly a sector of the crypto industry that is currently the most promising, the Wall Street veteran is not blind to the other crypto projects, either. He admitted to being bullish on Bitcoin, which recently exceeded the price of $58,000, which was followed by a strong correction, and then a powerful recovery.

Furthermore, he said that he was bullish on cryptocurrencies, in general. He noticed that

Cryptocurrencies are starting to take on the properties of financial assets in that they seem to be impacted by financial market events.

He said as much during last week’s discussion which focused on Bitcoin’s price drop and the rising bond yields.

Bianco is certainly more open to discussing his thoughts about cryptocurrencies than most big names on Wall Street, but he is likely not the only one who feels this way about the crypto industry.

After all, major investment companies like Grayscale and Microstrategy have already invested billions into Bitcoin on behalf of institutional clients, and experts believe that institutional investors will soon start to expand into the altcoin market, thus diversifying their portfolios and finding new investment opportunities. It is entirely possible that some of the DeFi projects might catch their interest, as well.