PEAKDEFI Debunks 3 Common Misconceptions About Investing Via DeFi

Launchpads are hot in the crypto industry. These organizations permit blockchains to raise capital while granting access to early-stage digital currency token sales for investors. The PEAKDEFI launchpad seeks to provide investors with additional opportunities in the Web3 ecosystem. Being a multichain platform, PEAKDEFI offers measures such as: 

• Projects must pass five stages of due diligence before being listed on the platform 

• Automated processes ensure the highest levels of effectiveness and efficiency 

In addition to these assurances, PEAKDEFI is out to debunk three common misconceptions about investing in decentralized finance or DeFi. It is defined as the crypto alternative to Wall Street and, thanks to the collaborative financial services on offer, is surging in popularity with financial institutions. This digital currency is built on the Ethereum backbone, and here we debunk some common misconceptions about it. 

DeFi Will Replace Banks 

DeFi will not replace modern financial systems but complement them. The 2008 banking crisis yielded Bitcoin and made DeFi a handsome prospect, but crypto is unlikely to take the place of traditional banking. Blockchains are not limited to DeFi, and banks can adapt crypto technology while maintaining tried and true services. As the financial sector is slow to change, this is another reason crypto is unlikely to dominate the industry.  

DeFi is Safer Than Traditional Banking 

While human error is rare in cryptocurrency, the industry has its own set of risks. While human errors can be corrected, digital activity cannot, and therein lies the danger of massive, unrecoverable losses. DeFi accounts can be hacked; thus, the losses are permanent. The traditional banking system has safeguards in place, such as the FDIC. There are no assurances like this in the crypto industry.  

DeFi Offers Anonymity 

A common misconception about cryptocurrency is that users remain anonymous. On the contrary, all digital trades and wallets are carefully recorded on the blockchain. The money trail can easily be tracked. While a person can be anonymous, the activity does leave a digital footprint which can lead to a person, a group, or an organization. DeFi can avoid some traditional and rigorous bank processes, but it still has identifying factors. If anything, the blockchain can lead a person to a user rather than help them remain anonymous. 

All in all, DeFi is to be treated with anything novel that shows great promise - with caution. As a yet nascent monetary concept, at this stage, it is designed to enhance the banking world, not replace it.