Financial Freedom Requires Financial Inclusion
Financial freedom is an incredibly alluring concept. From influencers on Instagram selling courses to degens on Crypto Twitter watching the charts, many people are seeking financial freedom, be it from a 100x trade or via passive income.
Typically, when speaking about financial freedom it all comes down to numbers. A number at which point you’d never have to work again. A number where you wouldn’t have to answer to anyone. A number that would unlock a new world.
Of course, this number varies between people. It’s not really about the amount but about the idea of being free. The pursuit of financial freedom has in many ways become a lifestyle with communities and industries springing up around it.
At Dusk, our idea of financial freedom goes deeper than a monetary amount. Financial freedom is about the very system within which money and assets exist, not just how many of them you have. We believe that having lots of money is one thing, but financial inclusion is where we really start to create a financial system built on freedom and inclusion, where everyone has access to institution-level assets.
But I’m not excluded
When we speak about financial inclusion the conversation usually refers to “banking the unbanked” and other such endeavors. We think of people don’t have access to the financial instruments that are standard in the West; a bank account, a loan, sometimes even the documentation required to get these things in the first place.
And while this is true (and a very strong use case of blockchain is banking people in this situation), many of us are underbanked and excluded from the full suite of financial activities.
You have people renting but unable to get a mortgage despite the rent being twice what their monthly repayments would be.
You have investments that are only available to people with particular licenses or amounts of capital, thus excluding those who do not meet the threshold.
And then, you have limitations on what people can do with their resources. Just because I own some stocks doesn’t mean I can exert creativity over them in the same way as I could with tokenized digital assets.
Just because we don’t feel underbanked or excluded from financial activities, doesn’t mean we aren’t! And just as the person without a bank account would have more options if they had a bank account, so too would underbanked banked people have the freedom to do more with what they have if they were allowed to engage in all financial activities.
The issue of custody
In the current situation, the financial system is underpinned by users not owning their own assets, with the vast majority being custodied by a trusted third party. You might have a lot of assets but cannot exert direct control over them in the way that you can in DeFi.
As co-founder and CEO of Dusk, Emanuele Francioni, has asked “Why can’t I download my bank account to a USB?”. Why must money be in a bank (or in piles of cash under your bed), and why must regulated assets be looked after by someone else?
Having assets in the custody of third parties leads to a whole industry built around looking after assets, not necessarily using them. These third parties also need to get paid, which adds (often very high) costs to transactions and retention fees, which are not only not necessary when compared to a smart contract but can exclude people from engaging in regulated financial activities as they can’t afford it or it seems out of reach.
The more steps you have to go through to do something, the less likely you are to do it. When you compare the need to find and pay a broker with crypto which allows you to make a transaction whenever you want, we can see that crypto is much easier and drastically reduces the steps and costs.
Why is this a problem?
This becomes a problem because it prevents the economy from evolving and excludes people from financial activities, be it on purpose or as a side effect. Centralized third parties like custodians tend to have a monopoly on assets and how they are transferred. They are effectively making money from market inefficiencies, and thus see no reason to innovate how we deal with our assets. All at the expense of regular people seeking access.
In times gone by it was not practical to keep your assets upon your person. Having a bank look after them made sense. Most people probably wouldn’t want all their money in cash or their gold in bars at their house. I get nervous walking down the street with a lot of cash on me, let alone having to look after everything I have!
So, it made perfect sense to pay someone to look after your assets for you. This is not bad per se, but it does have the side effects of halting the evolution of assets and how they’re used, and leaving people in a position where they’re dependent on these third parties, their banks, opening up the fear of social credit systems and leading to a lot of centralization.
Technological advancements have given us the opportunity to do things that once would have seemed impossible, but the system of assets being placed with a custodian has not (yet) changed an awful lot.
While technology allows us to speak to people on the other side of the world, it has not yet allowed us to change the way we “do” ownership.
Until blockchain.
Ownership, reimagined
Blockchain makes it possible to own what is yours. From fungible tokens to non-fungible ones, blockchain provides a record of ownership that cannot be falsified.
I can’t download my bank account to a USB because we don’t have a decentralized banking system that can exist outside of a bank, and it would be easy to copy my account and then the relevant bodies have no way of checking which bank account is real.
Blockchain solves this.
A wallet that can be downloaded. That can show, absolutely, that this wallet owns these assets.
With blockchain, it is possible to own your assets and to use them in the most efficient way available.
That, to us, is financial freedom.
Financial freedom for the future
At Dusk, we have a vision of a future where you can trade traditional and novel assets from your wallet, and own them.
This means you can buy a government bond straight from your wallet, and, should the service exist, stake it to earn a yield. You could even use flash loans - an amazing invention of blockchain - on traditional assets.
You can use your resources in exactly the way you want and create novel financial instruments that can only exist on-chain in a place where users own their assets and where those assets can be treated in a homogeneous way increasing global liquidity.
For us, financial freedom doesn’t just mean never having to work again, it means having the freedom to do what you want with your assets and in order to do this you need to truly own them.
It means removing the need for third-parties, giving control back to the owner, and allowing the economy and financial system to evolve.
This is why we’re so focused on privacy and compliance. We see the awesome advancements in DeFi and want to bring them to the world of regulated assets too, be it fiat, securities, or home ownership.
We want to completely remove the crypto sandbox so that you (and everyone else) can have the financial freedom to use all your assets in the way you want.
