In a recent interview, Zignaly co-founder, Bartolome Bordallo, compared traditional finance (TradFi) and decentralized finance (DeFi) to “two worlds” coming together. He explained how these two financial systems, while very different, are starting to merge, creating new opportunities for investors and businesses.

What is TradFi?

TradFi refers to traditional finance, the system we are all familiar with. It includes banks, stock markets, and institutions regulated by governments. A central authority, such as a bank or a financial institution, typically controls transactions in this system.

What is DeFi?

DeFi, short for decentralized finance, is a newer way of handling money. It uses blockchain technology to remove the need for intermediaries like banks. DeFi allows people to make financial transactions directly with each other, using cryptocurrencies and smart contracts.

How Are They Converging?

According to Bordallo, both systems have unique strengths. TradFi offers stability and regulations, while DeFi brings innovation and accessibility. More and more, traditional financial institutions are starting to explore DeFi solutions to modernize their services. At the same time, DeFi platforms are adopting practices from TradFi to make their systems more reliable and secure for users.

Opportunities in the Convergence

The merger of TradFi and DeFi could benefit both investors and companies. TradFi users can gain access to new and faster ways to handle investments, while DeFi users can enjoy more security and trust with added regulations.

Bordallo believes that the future of finance will involve a balance between these two systems. Combining the best aspects of both systems can enhance accessibility, innovation, and security in finance for all. As more institutions adopt blockchain technology and DeFi practices, the line between TradFi and DeFi will continue to blur, creating exciting opportunities for growth in the financial world.