To begin, let us all understand what decentralized finance is:
Decentralized finance otherwise also known as DeFi is blockchain-based finance. Defi offers financial instruments for lending and borrowing without the use of central financial intermediaries such as brokerages, exchanges, or banks. Instead, they are executed with the help of smart contracts.
Decentralized finance uses a technology known as blockchain to secure their data and transactions. Blockchain ensures that data is not tampered with. In fact, smart contract execution in blockchain makes data tampering extremely impractical. As a result, data in the blockchain is extremely secure and eliminates the potential of cyber-crimes.
Another important point to note is: when it comes to the basics of decentralized finance, one of the most important unique offerings of Defi is- transparency. Anyone with a smartphone and access to the internet can examine and evaluate a transaction's history on a DeFi , by tracking cryptocurrency addresses.
So in the Defi world: The data can neither be tampered with nor be hidden from the rest of the world by a single entity.
As oxymoronic as it may seem, DeFi's openness and security, if implemented, can potentially discourage governments from using people's tax money to support wars.
Could we achieve global peace with decentralized finance?
According to an article published on News18 and a tweet by Dr. Josh Cotton, “an enormous amount of cash just fell into the hands of the Taliban because cash can’t be truly secured,” adding of course, “Bitcoin fixes this issue.
If we examine his remark, we can see how quickly actual money may slip into the wrong hands, and how easily financial institutions, such as banks, can do nothing to prevent it.
It would have been impossible for the Taliban to get funding as the openness of blockchain technology would have made the flow of money apparent. Meaning, it would openly indicate the source of the Taliban’s funding.
Secondly, uncertainties of war often put pressure on the banking system. When the government overseeing the nation’s monetary system collapses. Fear-induced people want to hold on to cash for emergencies; they make bank runs in fear of losing all their money.
Decentralized finance is based on the principle of disintermediation. This means lenders and borrowers come together in the money market and create open and transparent peer-to-peer lending and borrowing.
As the Decentralised financial system is not based on the integrity and strength of a particular institution. This assures consumers that their money will still be protected even if a similar to the above event happens.
Examining the security, transparency, and immutability elements of decentralized finance, could we have avoided a futile 20 years and complete failure of Afghanistan?
Maybe. Because every transaction would be visible and irreversible. If every country embraced decentralized finance, governments would be deterred from financing people's money into wars, weapons, and violence. Leading to nominal finance for conflicts and bloodshed by an unknown entity.
Additionally, owing to blockchain technology, which provides high security in people's assets, resulting in less theft and hacking, would have also reassured fearful people. As fear gunmen and cybercriminals would be unable to seize assets in DeFi
If DeFi had been implemented by governments all over the world in the early twenty-first century, the United States may have avoided 9/11 and a slew of other terrorist attacks, not only in the United States but around the world. In the case of Afghanistan, the Taliban would not have been formed, and there would have been far less humanitarian and economic carnage.
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