GameStop’s drama is finished, yet it might flag enormous changes ahead for the economics. Here’s the reason why some financial experts think DeFi will take over conventional finance.
Back in 2008, a relief fund in the name of a bank bailout was established to stabilize the currency. Due to the financial crisis, the US government bought a lot of non-profitable toxic products and assets that were worth billions of dollars. This whole effort was a failed attempt to recover the financial condition and to prevent an economic meltdown. Almost $700 billion were fixed for the Emergency Economic Stabilization Act.
At the beginning of this year, Melvin Capital an investment firm of New York City placed a bet on the downfall of a game retailer known as GameStop. And to Melvin’s surprise, the two small firms joined hands of the partnership. Amber Ghaddar, the co-founder of AllianceBlock, said in an interview with the Forkast News that, it is a prime example of a power shift. Here the small firms came and bailed themselves out. She told the reporter that this is exactly what government should have done.
According to Ghaddar, the shift in the favor of small investors and the huge losses for low traders like Melvin is because of the rising drift towards cryptocurrency and blockchain. The flattening of the financial system is because it is not being regulated only by the institutions or investors.
DeFi’s Growth is Inevitable
Ghaddar predicted that in the coming years, DeFi will take over traditional finance. He said that it is a beautiful concept if you understand its philosophical perspective. He also stated that the only thing which is holding the world together is the dominance of the USD. And as soon as the trust in USD breaks, the currency will collapse too. Therefore it is essential to invest in something that is not controlled by USD and the government.
By adding light to the financial condition of the 20th century, he pointed that we all are living in an abnormal economic world, where only in one year the Fed has printed 40 percent of the total existing dollars. The former banker Ghaddar believes that DeFi will eventually replace traditional methods of finance.