Beyond Bitcoin: What Is Devolved Finance?


  • Devolved funding promises to make everyone fund what cryptocurrency does for money: interact with no central authority
  • Even in its early stages, enthusiasts can invest, borrow and exchange assets without any intermediary
  • Devolved Finance is particularly promising for the nearly two billion adults without a bank account

As Bitcoin prices continue to shatter previous records, some at the forefront of finance are looking to the next logical step: decentralized finance.

Devolved finance promises to do for every financial interaction what cryptocurrency does for money. Using peer-to-peer programs, everything from mortgages to investing can be done without the need for a central bank or authority.

For example, say someone wants to take out a loan to buy a house. They would postpone the call, perhaps on an online marketplace, and could be accepted by someone looking to borrow money.

The pair would negotiate contract terms, which would then be translated into an autonomous program. If the home buyer failed to fulfill the terms, by saying that he was not making his monthly payments, the title of the home could automatically be transferred to the lender without a lengthy closing process.

The idea is still in its early stages, but could eventually lead to unprecedented transparency and access. While people in countries with easy access to large financial institutions may not see the point, decentralized funding is especially promising for the nearly two billion adults who do not have bank accounts but have internet access.

Fears are growing over Hong Kong’s banking independence after HSBC suspends former ex-legislator’s accounts in favor of democracy Photo: AFP / Anthony WALLACE

The system is based on the same blockchain technology that powers Bitcoin. While the Etherium network is currently most popular, competitors are emerging that offer reduced transaction fees.

The integration of contracts and programs also allows innovators to develop increasingly complex interactions. Everything from short-term loans to asset exchange to investing without an intermediary can be implemented.