The first uses of new technology are often adapting old products to a new distribution channel. Modern tech giant Amazon started as an online book-seller in 1995, and it took twenty years for that business to evolve and take advantage of capabilities such as real-time communication (Alexa) and cloud computing (AWS) enabled by the internet.
As technologies mature, novel business models emerge that weren’t possible before. Uber and Lyft, for example, couldn’t exist without the innovation and mass adoption of the smartphone. These native applications take a first-principles approach to fully leverage the capabilities provided by the new underlying technological platform.
In the current era, much of our existing financial infrastructure feels outdated, with cumbersome payment systems, high fees, and convoluted structures that can require several different institutions to clear your debit-card coffee purchase. That means that even “modern” fintech applications are often constrained by last century’s technology. Meanwhile, blockchains and cryptocurrencies are re-inventing money as profoundly as the internet revolutionized communication.
This is an opportunity to bring finance into the 21st century. With “decentralized finance” (DeFi), developers can leverage the inherent capabilities of blockchains to build new financial primitives. These primitives enable a whole new class of financial products that will allow us to interact in ways that weren’t possible or even imaginable before. Each is a building block, and collectively they enable a huge number of powerful combinations. The next generation of developers will use these "Money Legos" to create the native applications of Finance 2.0.