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Problems in Traditional Finance and how Crypto will fix them!

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Hi, glad to see ya here!😀

This article is a transcription fo the full-length interview with Paraswap founder Mounir, on our YouTube channel.

Watch the full interview →

What Do You Think is the Problem with Traditional Finance?

23:40 | Michael: What do you think is the problem with Centralized Finance, that you know is driving to decentralized finance ?

23:46 | Mounir: I think first of all the problems that’s already happened like hacks and those inside jobs and what’s funny is in 2017 we used to talk only about mongols and many people now even forgot about bank hacks because there were like hundreds of bank hacks since 2017.

I would say that centralized C5 was, because there was no alternative to be fair in 2012 or 2013. There was no infrastructure to build B5 and it was a temporary solution that worked fine.

I think now we are switching to DeFi and even big C5 say projects like finance and others are also building on the fight.

I think that’s proof of the benefits of DeFi. Obviously some people can see it as opportunistic, but I would argue that can be kind of both.

24:45 | Michael: Yeah, that makes sense.

What are the Main Problems we Solve with Crypto?

24:50 | Michael: What if we go back even further. What if we say “okay”, you know, because some people will argue: “hey listen, you know, why do we need crypto?”.

Do you know if the existing system works fairly well or something? What do you see as the main problems? That we’re solving here with crypto and with D5 as compared with the traditional finance system.

25:08 | Mounir: Yeah, I would say we have to define works like it works for some people and it doesn’t work for others. It then also depends on geography rights. I don’t know in the U.S or Canada or Europe or any established country. Maybe that can make sense, because you have significant tools and signature products infrastructure and regulatory protection that can justify just ignoring crypto. But how about people, who are in other countries, that don’t have any infrastructure or any financial system and crypto is an opportunity for these people to at least have access to some finance, to savings accounts, to transfer value.

I think it’s the value proposition for these people that definitely makes sense. I don’t think we can argue there.

Yes, there are some projects in fintech. That’s what many people would say they would argue about fintech. But okay, fintech also is complicated.

Because it’s a country by country, it’s a regulatory regime, it’s also in third world countries. You have to deal with corruption and all of those things.

I mean there are a lot of complexities not as straightforward as it may seem. But crypto is just neutral, it’s just on the blockchain. As you have internet and mobile phone, computer, you have access to this. You have the same level of access as I and anyone who lives in any established country.

Why ZK? Optimist/Arbitrum

29:55 | Michael: That they choose to go with optimus, like Vitalik, seems to be really positive on optimistic roll-ups and arbitrary. Of course, it is like a variation on optimistic grow ups.

It’s interesting, because the user experience seems to suffer a lot in the process. I think, maybe you get a little bit more performance or something just because you know, you’re not verifying every one of them as compared to ZK.

Give me your thoughts on that.

I guess there’s three different approaches, right? You have twos, like arbitrarium etc… Then you’ve got side chains, like Polygon etc..

And then you’ve got something like an avalanche, which is like a layer one and in theory you don’t have to do anything what’s in your thoughts from. You know, you’re a software engineer and you have a technical background etc.

What’s your perspective on the different approaches?

30:45 | Mounir: In my opinion all side chains are layer ones. If you think about it, they are just EVM compatible or built on top of the EVM. Which makes us call them side chains.

31:00 | Michael: I guess the reason I would call them a side chain is because there’s a bridge, right?

If you bridge over assets from one to the other that becomes the thing that makes it a side chain which i guess you could do to all kinds of other things

31:10 | Mounir: Yeah, it’s just a matter of perspective.

Thanks for joining us on medium (and maybe on youtube as well).

Stay safe.

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