A question worth pondering: Can decentralized finance (DeFi) really replace traditional banks?

My view is that the probability is not very high. Instead of saying DeFi will overthrow traditional banks, it's more accurate to say that the two will gradually move towards integration. Each has its own significant flaws and advantages.

**What are the current bottlenecks of DeFi?**

First, security issues are quite tricky. Smart contract vulnerabilities, coding errors, and hacking attacks often result in user losses. Cryptocurrency assets themselves are highly volatile, and without a stable value anchor, risk management becomes a major challenge.

Second, regulation is still unclear. The anonymous nature of DeFi and cross-border liquidity make anti-money laundering (AML) and Know Your Customer (KYC) compliance particularly difficult to implement. A unified global regulatory framework has yet to be established, making large-scale adoption very challenging.

Third, user experience cannot be ignored. Private key management and on-chain interactions are too complex for most people, making it less user-friendly for ordinary users.

**What are the advantages of traditional banks?**

This is where it gets interesting. Government-backed credit, mature regulatory systems—these forms of public trust cannot be easily replicated by DeFi in the short term. For scenarios involving large sums of money or corporate credit, users still trust traditional banks more.

Additionally, services like credit lending are not yet feasible in DeFi. Traditional banks, based on offline scenarios and multi-source data credit evaluation systems, can meet diverse needs such as unsecured small loans and business loans. DeFi, on the other hand, mainly relies on over-collateralized loans, which have a much narrower scope.

Offline branches and comprehensive customer service systems also cover user groups who are less familiar with digital technology. DeFi cannot quickly fill this gap.

Therefore, rather than competing, it’s better to see them as complementary. DeFi innovates financial methods, while traditional banks learn and adapt. Ultimately, the future will likely be a fusion of both. What are your thoughts?