Decentralized Finance: Blockchain Technology and the Quest for an Open Financial System

27 Pages Posted: 12 Jul 2019 Last revised: 21 Oct 2019

See all articles by Yan Chen

Yan Chen

Stevens Institute of Technology - School of Business

Cristiano Bellavitis

Auckland Business School, Management and International Business

Date Written: July 3, 2019

Abstract

Blockchain technology can reduce transaction costs, facilitate decentralized platforms, and produce distributed trust, creating a foundation for new business models. In the financial industry, blockchain technology allows for the rise of decentralized financial services that may be more decentralized, innovative, interoperable, borderless, and transparent. Decentralized financial services have the potential to reduce transaction costs, broaden financial inclusion, facilitate open access, encourage permissionless innovation, and create new opportunities for entrepreneurs and innovators. In this article, we assess the benefits of decentralized finance, identify existing business models, and evaluate potential challenges and limits. As a new area of financial technology, decentralized finance may reshape the structure of modern finance and create a new landscape for entrepreneurship and innovation, showcasing the potential of decentralization as a foundation for new business models.

Keywords: blockchain; bitcoin; libra; cryptocurrency; decentralized finance; open finance; fintech; financial system

Suggested Citation

Chen, Yan and Bellavitis, Cristiano, Decentralized Finance: Blockchain Technology and the Quest for an Open Financial System (July 3, 2019). Available at SSRN: https://ssrn.com/abstract=3418557 or http://dx.doi.org/10.2139/ssrn.3418557

Yan Chen (Contact Author)

Stevens Institute of Technology - School of Business ( email )

Hoboken, NJ 07030
United States

Cristiano Bellavitis

Auckland Business School, Management and International Business ( email )

12 grafton rd
Auckland
Auckland, Auckland 0000
New Zealand

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