Finance
Can Decentralized Finance Replace Traditional Payments – The Daily Hodl
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There’s a lot of talk about DeFi (decentralized finance) these days.
If one were to believe all the hype, it would seem that DeFi is a foregone conclusion it’s not a matter of if complete decentralization will happen, but rather a matter of when.
Admittedly, it does appear that things are heading in that direction. The potential, the market need and the technology are all there.
While some infer that we could make the switch right now, that’s beyond optimistic.
It’s true that decentralization is dependent on blockchain technology, and you’d be hard-pressed to find people who will argue that blockchain doesn’t work.
Even naysayers, when pushed, will concede that the technology itself is solid and has the potential to disrupt finance as we know it.
But just because blockchain technology has proven itself doesn’t mean that DeFi is a necessary inevitability.
DeFi will almost certainly play a role in the future of finance. But I can see at least three major roadblocks that need to be overcome before DeFi has a chance of overcoming traditional payments.
Consumer buy-in and trust
Our current centralized systems have been in place for a long time. They’re accepted because they’re familiar and for the most part, they work very well.
People are resistant to change, particularly when they don’t see a clear benefit.
Even when shown the upsides, many will distrust a new way of doing things, taking refuge behind an ‘if it ain’t broke, don’t fix it’ mentality.
One of the chief arguments for DeFi is that it removes the middleman. But that doesn’t take into account that some people would rather pay a third party to perform a service.
We generally accept that like attorneys or CPAs financial professionals know more than we do about their specialty and will do a better job.
More importantly, when professionals provide a service, they also take on the accompanying risk.
Consumers will be even more hesitant to accept a new system if it also means losing protection and accepting liability.
This was effectively proven at the dawn of the credit card age. Payment card usage did not gain wide-scale acceptance until 1974, when stronger consumer protection mechanisms were put in place.
Acceptance increased once consumers knew they had a safety net if they were scammed or defrauded.
Even then, though, it still took decades for credit cards to become a dominant payment preference.
People needed formalized assurance that card payments worked across the board. That required at least some degree of centralization, as would any consumer protections used with DeFi.
Banks and financial institution acceptance
Financial organizations are understandably dragging their feet over a move to DeFi.
Our existing banking model is deeply rooted in the most basic tenet of capitalism being paid to perform a service. In this case, arranging financial transactions on behalf of the customer.
As we’ve seen, decentralization empowers users to do the work without a go-between, and consumers may not go for that. For the financial industry, however, DeFi could be devastatingly disruptive.
Services that are currently integral to their business could become obsolete, meaning banks stand to lose the biggest revenue source they have.
DeFi could also potentially expose financial institutions to increased fraud risk.
Currently, US banks are legally required to use KYC (know your customer) protocols to identify the individual attached to a transaction.
That won’t work with blockchain in a completely decentralized blockchain system, users can remain strictly anonymous.
If actual names and other personal information aren’t used, it’s exponentially more difficult to determine if people or organizations are engaged in illegal activity.
Money laundering, market manipulation and bank fraud are serious concerns.
That’s something that could impact the institutions in question, as well as the account holders and merchants they work with.
Lack of clarity regarding government oversight
While proponents of DeFi like to emphasize the absence of government regulations, that’s actually one of the challenges in achieving wide acceptance.
Without a centralized system, legislation like the aforementioned KYC rules would be nearly impossible to enact. To some, that may sound like a feature, rather than a bug.
However, legislators are not going to see the situation in the same light.
The same goes for any government mandates and agencies that protect consumers, including the FDIC (Federal Deposit Insurance Corporation) nd even the government itself could be a target.
Since transactions are extremely difficult to trace to an individual, it would theoretically be simple for a person to understate the amount of taxes owed or avoid paying them altogether.
Faced with the likely increase in criminal activity and an associated drop in government revenue, oversight legislation is almost inevitable. That means at least some centralization will be mandated.
So, finance can only really be as decentralized as lawmakers will allow it to be, and it’s unclear how they will respond.
DeFi and CeFi (centralized finance) an this be a ‘yes, and?’ situation
None of this means DeFi isn’t viable. Rather, it means that some amount of centralization is probably necessary to make it work on a wide scale.
And in fact, we’re already seeing de facto centralization popping up, even in arenas considered fully decentralized.
Stable coins, for example, remain stable by requiring a centralized issuer who backs sales by legal tender.
CBDCs (central bank digital currencies), while controversial, are still in the works. Even Bitcoin mining is seeing centralization become a point of contention in the community.
That may be splitting hairs, as far as what we call centralization, but the crypto market is growing. The bigger it gets, the more likely we’ll see centralized regulation from FIs, the government or both.
We’ll also see combined efforts to sell the benefits of crypto to the public.
Individual brands will promote themselves, naturally, but advertisers, marketers and even lobbyists will recognize that selling the entire concept will also be necessary.
It would be hard to do that effectively without centralization. Again, that doesn’t make DeFi a complete impossibility.
The two systems are in competition, to some extent, but they are not mutually exclusive.
DeFi and CeFi triking a balance
As convenient as it may be, trying to characterize this issue as a ‘good guys versus bad guys’ battle isn’t in our best interest.
Neither centralization nor DeFi are inherently bad.
One could argue that it would be easier to stick with the traditional way of doing things, but that genie is already out of the bottle.
Going backwards isn’t really an option, even if fully realized DeFi is unlikely to materialize.
The next generation of development, DeFi 2.0, is already addressing some of the challenges of decentralization, including scalability and seamless cross-chain interoperability.
But widespread acceptance is still a ways away.
There are multiple layer two solutions, and as with any decentralized service, that raises questions as to how well they work and how safely any given code performs.
Can we have two competing ecosystems existing side-by-side? Probably not indefinitely one or the other would eventually triumph.
But a better question might be why would we want to?
DeFi is going to continue to evolve in parallel to traditional payments. It would make sense to eventually work toward a single, fully realized solution that combines the best elements of both models.
A payments ecosystem that benefits from the speed, privacy and egalitarian ethos of DeFi, with the security and institutional legitimacy of TradFi (traditional finance).
The trick is to pull this off without losing sight of the main goal safe, secure transactions, high efficiency and enhanced customer experience.
The future of DeFi will depend on how we strike that balance between maximizing benefits and still enjoying the protections of centralization.
Monica Eaton is the founder and CEO of Chargebacks911. This risk mitigation firm protects more than two billion transactions annually to help online merchants optimize profitability through dispute management. Monica is a globally recognized speaker who has shared her insights on technology, finance and entrepreneurship with audiences around the world.
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Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any loses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.
Australians risk losing a huge amount in superannuation inheritance due to little-known tax rules. Older generations will transfer trillions of dollars in wealth to younger generations in the coming decades, with much of this money to come via superannuation and property assets.
Most families don’t realise that their kids could lose a third of their inheritance to superannuation tax. But Pivot Wealth financial adviser and Yahoo Finance contributor Ben Nash said this tax could be “completely avoidable” with a bit of strategy.
When someone passes away, their superannuation is split into two main parts: the tax-free component and the taxable component.
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If the money goes to adult kids or anyone who is not financially dependent on the person passing down the super, the taxable portion gets hit with a “death tax” of up to 32 per cent.
“On a $1 million balance, that means $320,000 that can be completely gone,” Nash explained.
The biggest component of most people’s super funds is the taxable component because it’s made up of any compulsory employment super contributions, salary sacrifice or tax-deductible contributions, and the growth and earnings on these funds.
Do you have a story to share? Contact tamika.seeto@yahooinc.com
The good news is it is possible to reduce or avoid the tax altogether.
“The fix here is what’s called a withdrawal and recontribution strategy. It’s a pretty simple concept, although the rules are a little bit complicated,” Nash explained.
“Basically, while your parents are still alive and eligible, they can withdraw some or all of their super, pay no tax on the withdrawal, and then put it back into their super as a non-concessional or after-tax contribution.
“That shifts their super balance from taxable to completely tax-free. When you do that gradually over time, you can save literally hundreds of thousands of dollars in future tax.”
Your parents would need to be over the age of 60 and meet a condition of release (like retirement) so they can withdraw part of their super tax-free.
The rules around withdrawing and contributing to your super fund, along with how much you put in, are complicated, so it is important to get financial advice from a professional.
The Productivity Commission previously estimated that $3.5 trillion would be passed on from Aussies aged 60 and over by 2050. More recent JBWere figures put the figure at $5.4 trillion over the next 20 years.
Tech company Oracle (ORCL) said on Sunday that it planned to raise $45bn (£32.8bn) to $50bn in 2026 to fund the expansion of its cloud infrastructure business.
The company said that it planned to achieve this funding target using a combination of debt and equity financing.
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“Oracle is raising money in order to build additional capacity to meet the contracted demand from our largest Oracle Cloud Infrastructure customers, including AMD (AMD), Meta (META), Nvidia (NVDA), OpenAI, TikTok, xAI and others,” it said in a statement, according to a Reuters report.
Oracle (ORCL) shares hovered just below the flatline in pre-market trading on Monday morning and are trading 3.4% in the red over one year.
Media and entertainment giant Disney (DIS) was in focus on Monday morning, following a Bloomberg report that it was close to picking theme-park division chairman Josh D’Amaro as the company’s next CEO.
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According to the Bloomberg report, Disney’s (DIS) board is aligning on promoting D’Amaro into the role and will vote on naming a new CEO in the coming week, citing people familiar with the matter. D’Amaro would take over from Bob Iger, who returned as CEO in 2022, having served in the role from 2005 to 2020.
Disney (DIS) had not responded to Yahoo Finance UK’s request for comment at the time of writing.
The company is set to report its fiscal first quarter earnings later in the day on Monday. Disney (DIS) shares hovered just below the flatline in pre-market trading on Monday morning and are 0.6% in the red over one year.
In Asia, shares in Hong Kong-listed electric vehicle (EV) company BYD slid 7.3% on Monday, after reporting a drop in sales in January.
BYD (1211.HK) said on Sunday that it had sold 210,051 vehicles in January, which was 30.1% lower than 300,538 it sold in the same period last year.
The company sold 83,249 battery electric vehicles last month, which was 33.6% lower than January last year and it delivered 122,269 plug-in hybrid EVs, down 28.5%.
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AUSTIN, Texas, Feb. 1, 2026 /PRNewswire/ — Oracle Corporation (NYSE: ORCL) today announced its full calendar year 2026 plan to fund the expansion of its rapidly growing Oracle Cloud Infrastructure business. Oracle is raising money in order to build additional capacity to meet the contracted demand from our largest Oracle Cloud Infrastructure customers, including AMD, Meta, NVIDIA, OpenAI, TikTok, xAI and others.
Oracle expects to raise $45 to $50 billion of gross cash proceeds during the 2026 calendar year. The company plans to achieve its funding objective by using a balanced combination of debt and equity financing to maintain a solid investment-grade balance sheet.
On the equity side, Oracle plans to raise approximately half of its 2026 funding through a combination of equity-linked and common equity issuances. This is expected to include an initial issuance of mandatory convertible preferred securities, representing a modest portion of the overall equity funding, as well as a newly authorized at-the-market equity program of up to $20 billion. The company plans to issue equity from the at-the-market program flexibly over time at prevailing market prices, based on market conditions and capital needs.
On the debt side, Oracle intends to complete a single, one-time issuance of investment-grade senior unsecured bonds early in 2026 to cover the other half of the company’s planned funding for the year. Oracle does not expect to issue additional bonds during calendar year 2026 beyond this transaction.
This funding plan reflects Oracle’s commitment to maintaining an investment-grade rating, prudent capital allocation, balance sheet strength, and transparency with investors as the company continues to expand its Oracle Cloud Infrastructure business. These transactions have been approved by the Oracle Board of Directors.
Goldman Sachs & Co. LLC will be leading the senior unsecured bond offering, and Citigroup will be leading the at-the-market issuance and mandatory convertible preferred equity offering.
About Oracle
Oracle offers integrated suites of applications plus secure, autonomous infrastructure in the Oracle Cloud.
Trademarks
Oracle, Java, MySQL, and NetSuite are registered trademarks of Oracle Corporation. NetSuite was the first cloud company—ushering in the new era of cloud computing.
“Safe Harbor” Statement: This press release contains forward-looking statements, including statements regarding Oracle’s expected funding needs, anticipated credit ratings, capital markets transactions, and financing strategy. Actual results may differ materially from those expressed or implied due to various risks and uncertainties. Among the factors that could cause actual results to differ are: changes in the timing of any customer’s purchases or ability to fund its commitments; delays or development and/or operational problems with the construction of implementation of any of the data centers; and new or different commercial opportunities that cause the Company to reevaluate its near-term capital needs. Oracle undertakes no obligation to update these forward-looking statements, except as required by law.
Oracle Corporation may file a registration statement (including a prospectus) with the SEC for the offering to which this communication relates. Before you invest, you should read the prospectus in that registration statement and other documents Oracle Corporation has filed with the SEC for more complete information about Oracle Corporation and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, you may obtain a copy by visiting www.oracle.com/investor, calling our Investor Relations Department at 1-650-506-4073, writing to Investor Relations Department, Oracle Corporation, 500 Oracle Parkway, Redwood City, California 94065 or sending an email to [email protected].
SOURCE Oracle
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