It is often overlooked that the first email exchanges involved US university professors who were attempting to share files and collaborate during the early 1970s. Initially, these communications relied on a closed system between two ARPANET computers that used the File Transfer Protocol (FTP) to transmit messages.

This process was slow and tedious, resulting in limited adoption, primarily confined to Ivy League institutions and government research labs.

Mainstream web browsing only became viable after the Hypertext Transfer Protocol (HTTP) was developed, resolving usability issues.

Modern decentralized finance (DeFi) protocols share similarities with early Web2 technologies; they are often complicated and surrounded by advocates who reject any interaction with traditional financial services (TradFi). While it is understandable that crypto enthusiasts are critical of TradFi due to its failures culminating in the 2008 crash, this rigid stance is hampering progress and limiting the potential of DeFi.

The Synergy of DeFi and TradFi

Should those leading DeFi and TradFi decide to collaborate, we may one day refer back to this period as a pivotal moment akin to the rise of web browsing in the 1990s—when digital asset service providers dismantled barriers between TradFi and DeFi, enabling the broad acceptance of cryptocurrencies.

Though it might be challenging to envision, established pathways already exist through traditional payment service providers (PSPs) integrating cryptocurrency, allowing users to directly fund a Mastercard from on-chain liquidity. This hybrid model merges the efficiency and programmability of digital assets with the global accessibility of well-known payment networks, making it simpler to utilize crypto in everyday life. It is not merely a choice between TradFi or DeFi; it is about combining both to enhance user experience.

Individuals can send their digital assets to the public key associated with their debit card, allowing them to use cryptocurrencies wherever Mastercards are accepted. This may seem trivial, but by bridging niche digital assets and mainstream financial service providers, a genuine chance emerges to expand DeFi and offer financial access to billions who lack banking services through TradFi.

Reassessing Use Cases

In just over 16 years, a multi-trillion-dollar asset class has been birthed, yet only a minute fraction is actively utilized in the real economy. Most applications focus on remittances, with minimal use outside of cold storage or speculation. This limited utility results from the closed systems established from mutual distrust between the DeFi and TradFi communities, thwarting popular cryptocurrencies from reaching their full potential.

By linking digital assets to TradFi, barriers that have previously obstructed the use of these assets are dismantled. Debit cards associated with digital assets can integrate with existing PSP frameworks, unlocking their true capabilities. History has shown that significant technological shifts have occurred within shorter timeframes once usability challenges have been addressed. Moving forward, data silos, isolated systems, and unwarranted distrust of established interests must be put aside in the emerging Web3 economy.

By transcending these ideological divides, DeFi and TradFi can collectively achieve far more than what is currently realized. Enhanced cooperation with existing infrastructure partners will accelerate product development within the payments sector, enhance existing systems, and scale effectively, minimizing costs for billions currently unbanked or underserved.

This needn’t be viewed as a zero-sum competition between opposing factions. By collaborating and leveraging existing infrastructure, both sides can dismantle obstacles and accomplish significantly more for the benefit of everyone involved.

For an extended period, crypto advocates have developed intricate systems within closed environments as a reaction to TradFi’s shortcomings. These visionaries have made substantial strides both financially and technologically.

Now is the time to set aside the ideological conflicts that inhibit mainstream incorporation.