Published on 
11 October, 2023

TradFi vs DeFi


Investing money has been a fundamental part of wealth-building and financial planning for decades. However, this process was plagued by barriers that made access difficult for a large part of the population for a long time. Decentralized Finance, or DeFi, has emerged as a catalyst to democratize the world of investments and overcome many of these barriers.

In this article, we will explore the characteristics of investing in the old financial model (Traditional Finance or TradFi) and how Decentralized Finance (DeFi) is transforming this sector. We will analyze how DeFi has removed obstacles such as bureaucracy, the need for identification, the dependence on bank accounts and brokers, and the age restriction. We will also delve into how DeFi is opening the doors to unbanked societies facing high tax rates and similar problems. We will highlight the importance of financial education in this new digital era. However, we will also discuss the latent risks in the DeFi industry today.

Investments in the Traditional Financial Model


One of the biggest obstacles to investing in the traditional financial model is the overwhelming bureaucracy involved. Opening a bank account requires a large number of documents, and identity verifications which often involve lengthy procedures at the bank branch. This process is not only slow but also excludes those who do not have access to valid identification documents.

Identification Requirements

Most investments require complete identity verification. This excludes those who, for various reasons, cannot provide valid identity documents, either due to their immigration status or lack of proper records.

Mandatory Bank Accounts

Another significant obstacle is the need to have a bank account. For many, especially those living in rural areas or developing countries, access to traditional banking services is limited or non-existent. This leaves them outside the financial system and without access to investment opportunities.

Dependence on Brokers and Commissions

Once the initial barriers are overcome, investors face dependence on brokers and the associated commissions. Hiring the services of a broker is usually expensive, and commissions for buying and selling assets can significantly reduce investors' profits. Not to mention that after commissions, every State has tax rates on the returns and dividends obtained, which further liquefies people's opportunities when investing.

Age Restrictions

Finally, age restrictions are also a deterrent for many aspiring investors. In many, if not all, countries, you are required to be over 18 years of age to participate in certain financial products, which excludes young people from the opportunity to invest and learn about finances from an early age.

The Decentralized Finance Revolution

Universal Access

Decentralized Finance, or DeFi, is radically transforming investment and access to financial services. Instead of relying on intermediaries, DeFi uses blockchain technology to allow anyone to participate in the global financial system directly and without arbitrary age, location, or documentation restrictions.


One of the most notable features of DeFi is its ability to provide financial services to unbanked people. Around the world, millions of people do not have access to traditional bank accounts due to various reasons, such as a lack of banking infrastructure in rural areas or the inability to provide valid identification documents. DeFi opens the doors to these people, allowing them to participate in a variety of financial services using just an internet connection.

Applications in a More Developed Crypto Industry

The crypto industry continues to mature, DeFi has become a fundamental pillar of this ecosystem. DeFi platforms offer innovative ways to earn interest, exchange assets, and participate in the governance of crypto projects. This not only democratizes cryptocurrencies but also drives innovation in the space. With DeFi, the crypto industry becomes more accessible and diverse.


In the old paradigm, the individual was rarely the custodian of his or her “own” assets. Bitcoin, DeFi, and in particular Money on Chain shed light on this change in trend.

Bitcoin allows us to access unspeakable value, a value of which we are true owners in this era of digitalization. DeFi provides accessibility to those tools that would otherwise only be available to a few. And, Money on Chain unites these concepts to allow people to be custodians of their own assets and access the world of finance with hard assets, backed by uncensorable value, such as Bitcoin.

Financial Education in the Digital Age

As DeFi expands, financial education becomes a fundamental pillar. Unlike traditional investments, where intermediaries often provide guidance, in DeFi, users are responsible for their own financial decisions. Financial education has become a powerful tool to empower people to make informed decisions and avoid unnecessary risks.

Risks in the DeFi Industry

Despite its advantages, DeFi has its own risks. Decentralization and lack of regulation can lead to security issues, scams, and financial losses. DeFi projects are susceptible to hacks and exploits, which have resulted in the loss of millions of dollars in crypto assets.

Additionally, the lack of regulation means that investors must be extremely cautious and conduct extensive due diligence before participating in DeFi projects. The inherent volatility of cryptocurrencies can also result in significant losses, and it is crucial that investors understand the associated risks.


Investing in the old financial model is often uncharted territory for many, with significant barriers that exclude a large part of the population. Decentralized Finance has revolutionized the model by eliminating many of these barriers and allowing broader and more democratic access to financial services. DeFi is debanking, driving crypto adoption, and emphasizing the importance of financial education.

Technology is transforming the way we invest and access financial services. It represents a fundamental change in the way we think about investments, its impact on society, and the global economy will continue to grow in the coming years. Money on chain definitely contributes to this by providing simple and powerful tools to use.

Ultimately, financial education becomes an essential skill for navigating this new financial world, where opportunities and risks coexist. Technology has become indispensable to empower people and provide universal access to financial opportunities.

Author: @BTCLegosi

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