The Future of Finance: Vanquishing Centralization

Alvara Protocol
4 min readMar 20, 2023


We have to go back to around 1397 to trace the origins of what we recognise today as the modern banking system. All the way back to the medieval and renaissance Italy, particularly Florence where the Peruzzi and Bardi families dominated banking in the 14th century. Perhaps the most famous name tied to the concept is the Medici family who established the Medici bank in 1397. Ahead of their time in making the realization that operating as an intermediary in financial-related transactions could be very profitable indeed. As the saying goes, the secret to being a good businessman is being a good middleman. From then right up until the modern day, we’ve been wholly tied to and reliant upon this system. Until now.

Whether you’re hooked into the inner workings of the crypto space or not, it’s more than likely that you’ve heard the term DeFi banded around somewhere online. You’ve unquestionably heard of Bitcoin at the very least. In recent years we’ve seen the formative stages of a financial revolution taking place in the form of decentralized finance. Whether or not the masses are aware of this fact yet is irrelevant, as year on year the waves are gradually growing in size and strength. Sooner or later, before they realize it, it will have grown into a tsunami with the capacity and capabilities to make more than a sizeable impact on the established financial institutions and protocols that we’ve been accustomed to for so long.

Growing centralization and concentration of power within the institutions we rely on for our day-to-day lives is becoming problematic, to say the least. The notion of free market capitalism dissipated in the aftermath of the 2008 financial crisis. In a right and just free market, those entities that failed in every sense of operating as a business should have been forced to fail in the same way you or I would have if we started a business and ran it into the ground, we’d be forced to shut up shop. “Too big to fail”, we were told. As such, the bailouts began. No one was held responsible for the financial catastrophe that ensued. Instead, the burden of shouldering the cost impact of the crisis was shifted onto the average person, with devastating results. Yes, we the people were made to pay for the mistake of a minority of powerful corporations and individuals that were motivated solely by greed and lining their own pockets.

What have we learnt from the ’08 crisis? Nothing it would seem. At the time of writing, we’re gripped by the worst inflationary crisis in decades after borderline kamikaze fiscal policy in the aftermath of the Covid-19 crisis. Quantitative Easing was rolled out globally to address the situation. Simply put, QE involves the act of central banks printing cash as they see fit. One fantastic quote that accurately summarizes the impact is that ‘quantitative easing is a form of wealth transfer from the future poor to the current rich’. This is exactly what we’ve seen as the world has opened back up following the pandemic and global markets have begun to operate normally. The net worth of many millionaires and billionaires massively increased throughout the course of the last few years whilst the average person is again left to operate with soaring inflation and a so-called ‘cost of living’ crisis.

The problem lies with the fact that we have allowed these centralised entities too much power and control. It really is that simple. Sooner or later, the penny will drop with many people and the odds are firmly stacked against them with the current system. When that penny does drop, many will wonder what is the answer to these problems. What’s the fix? It’s quite simple. Decentralization.

Without going too technical, DeFi refers to the new financial system that’s built using blockchain technology. The aim is to provide open, permissionless, and transparent financial services to anyone with an internet connection. The main beneficial aspect of this is that it completely eliminates the need for any intermediary or middleman. Users can operate and transact peer-to-peer in a trustless nature, as smart contracts on the blockchain, which are essentially self-executing code, automate the process of financial transactions, and allow users to interact with financial products and services in a secure manner without the need for oversight or permission. These smart contracts are completely transparent. Every ledger is completely visible to anyone whilst still allowing users to remain anonymous behind a log of transactions from wallet to wallet. The cost incurred from the intermediaries we’re accustomed to? Gone. The need to rely on a bank to store your hard-earned money? Gone. For the first time ever, we the people can live, function and operate completely autonomously.

As we write this article, banks are collapsing again in the United States and the contagion is seemingly starting to spread to Europe. History doesn’t repeat itself but it certainly rhymes. It would appear that as a society we have learnt nothing from the ghosts of the past. The same inherent character flaws that contribute to human's overall makeup are as present as ever. Greed continues to lead to recklessness. It’s only a matter of time until people see the writing on the wall with the existing system that holds a firm grip on us all. When the dominos begin to fall yet again, what will you do? It’s not an easy answer by any stretch of the imagination. But answer this: who do you trust more than yourself? If the answer is no one, then perhaps it’s time to take back control of the vital aspects of life.

This space is attracting some of the brightest minds on this planet to commit to creating and building financial tools that will benefit and empower the masses for generations to come in a democratised and decentralized fashion. The revolution has just begun. DeFi is the way.