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I’m going to start off with the premise that finance has always been immaterial and that explains why our systems of finance have continued to trend in that direction.
Trade is the exchange of goods or services
Money is a record of who has provided value but has yet to receive value in return i.e. it stores the value you have provided until you want to receive value from another person
This could be done mentally, with everyone keeping track of who has done who a favour but has yet to receive a favour in return, that’s the most basic model of money and it immaterial i.e. it’s in the mind
Essentially finance is a system that tracks the exchange of value in an economy
Go through the various physical representations of that system of tracking that exchange of value
In the original barter system there was no financial system as such, not one that was in between the people trading, it was originally peer to peer, two people exchanging value
So banking was really the first time that a third party or middleman was introduced into that, thus creating the first system or infrastructure that was an abstraction from direct person to person trade
The 4 epochs of financial dematerialisation
Personal service
From your banker or financial advisor in person
Self service
The early electronic services
ATMs
Telephone banking
Credit cards
FinTech (catalysed by Internet technology)
Internet banking
Apps on mobile devices
Price comparisons websites
Paperless bills
Crowdfunding / Kickstarter
Peer to peer lending (Kiva, Funding Circle)
Self service brokerage accounts (eToro)
DeFi (catalysed by blockchain technology)
Everything in FinTech except open, permissionless, decentralised and ownerless like the Internet
Blockchain accounting
IPOs > ICOs > IEOs > IDOs
Decentralised money markets
Instantaneous peer to peer self service
Savings and loans
Insurance
Options etc
Tokenization of people (sports scholarships)
A truly public infrastructure
Returning finance back to its original person to person model, removing the middleman
Native digital assets
Up until DeFi it was the record keeping system that was dematerialising while the assets being tracked remained physical (real estate, commodities etc)
Now we have assets being born and existing exclusively in cyberspace (NFTs, Bitcoin etc).
In DeFi we have a dematerialised record keeping system AND the assets themselves being immaterial
▶️ 3Speak
