1. The investment side of cryptocurrency (aka “money crypto”) has struggled to repair violations of trust in centralized finance (CeFi).
2. Tech crypto must focus on improving user safety on-chain, and work has already started to improve self-custody and peer-to-peer (P2P) transactions.
3. DeFi only “fixes” things if its risk profile is low enough for everyday people to feel safe enough to actually use it.

As cryptocurrency continues to gain traction in the financial world, the need for improved security grows ever more pressing. With the investment side of cryptocurrency (aka “money crypto”) struggling to repair violations of trust in centralized finance (CeFi), tech crypto must focus on improving user safety on-chain. Bill Hughes, senior counsel and director of global regulatory matters at ConsenSys Software Inc., believes that self-custody and peer-to-peer (P2P) transactions enabled by blockchain are the key to addressing this issue.

Self-custody refers to the ability of users to keep control of their own funds without having to rely on a third party. P2P transactions allow users to send and receive cryptocurrency without the need for a middleman, such as a bank or an exchange. This type of decentralized finance (DeFi) could go a long way to avoiding the same sort of failures that have plagued CeFi in the past.

However, DeFi users still face many threats, including malicious actors and scams. For DeFi to be successful, protocols must be not only useful but safe. This means that the risk profile must be low enough for everyday people to feel comfortable using it. Currently, the tech is not quite there yet, and this is causing some to walk away in frustration, fear and, in the worst case, financial ruin.

Fortunately, the work to improve these protocols is already underway. More and more developers are focusing on user safety and making DeFi more accessible and secure. For example, in 2020, the Ethereum community released EIP-1559, which is a major improvement to Ethereum’s transaction fees and security. This is just one of many improvements that will be made in the coming years to ensure that DeFi is safe and user friendly.

Overall, improving user safety on-chain is crucial for the success of cryptocurrency. With the right protocols and improvements, DeFi could provide the secure and trustless transactions that users need. As we move into 2021 and beyond, tech crypto will be a key focus for building a more secure and safe cryptocurrency ecosystem.


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