Can DeFi work with low tech? That's a question I've been trying to answer since I discovered the term a couple of months ago when I joined Hive. I believe it can, but I have no answers. Instead, I write this post to share questions I have and raise points for consideration.
Cryptocurrency, smart contracts, and DeFi are all transforming the way we use money and think about money. The decentralization aspect of DeFi makes it possible for each of us to be our own bank. It's truly an amazing thing.
As amazing as crypto, smart contracts, and DeFi are, they share one critical flaw....
All depend on electricity.
Weather events take out power grids all the time. Acts of pettiness are part of the human condition. We know what wars can do. Even if all is well on Earth, there is always that stray asteroid or runaway coronal mass ejection from the Sun. Any of these can make electricity unavailable for who knows how long. WIthout electricity, whatever crypto we have is beyond reach and may as well be figments of our imagination.
Heck, if time travel ever becomes a reality, the time traveler could end up in a period where electricity had not been invented. What if we brought to that low-tech period today's knnowledge-- or tomorrow's-- of DeFi?
I was just thinking this: why can't we transfer the methods and benefits of DeFi to a low-tech (or even no-tech) world?
Principles of Cryptocurrency
Precious metals have been used as money for thousands of years. Certain base metals have also been used as money for just as long. Money also came in the form of gems, harvest, livestock, stones, even shells. Ultimately, money is whatever we want it to be and whatever we are willing to accept.
Cryptocurrency makes the use of money a trustless and permissionless process. With crypto, we don't need to trust somone to accept their payments. With crypto, we don't need anyone else's permission to do whatever we want with our money. It looks as if for DeFi to succeed in a low-tech world, these two principles need to exprssed in physical ways.
Trustless
The cryptography potion of cryptocurrency may be difficult to implment in a low-tech world, if not virtually impossible. Perhaps it can be implemented, but I have no idea how.
However, older forms of money have ways of being authenticated. Acids can be used to test not only the authnticity of precious meteals but also the content present. I've seen this at coin dealers and jewelers. Gems have their own ways be be authenticated. Once authencity is confirmed, it's a matter of weighing the items used as money.
As for authenticating identity, documentation may be necessary. If not, maybe some other tool can be used for authenticating identification. Perhaps there's a low-tech way which doesn't need ID-- say, a password or passphrase, may be enough within a certain conttext.
Using our current level of knowledge, we can figure out a way to implement trustlessness in a low-tech world should that situation take place.
Permissionless
This could relate to how we acquire money.
If you go to a bank for a loan, you essesntially ask for permission to borrow money. If you want to apply for a mortgage, you need to ask for permission. If you want a line of credit, you need permission.
Cryptocurrency does away with that need to ask, and DeFi take it even further.
In what ways can the permissionless aspect of DeFi be applied to a low-tech world? I'm still fuzzy on DeFi, so I don't know enough to ask more questions, never mind to have answers.
Paradigm Shift
Just as important as finding ways to bring the principles of high-tech DeFi to a low-tech world or context is bringing about a paradigm shift. Low-tech financing may be centralized, as it has been the last 2 centuries. Even if low-tech financing is decentralized, can it be made trustless and permissionless? In both cases, what's needed is a change in the way people think about money and financing and banking.
As long as we have electricity, we should ride the crypto train as long as that train moves. Should the time come when electricity is no longer available over a long period, we should find ways to apply the principles of high-tech DeFi to a low-tech world.
Feel free to add ideas or new questions to consider in the comments!