Finance. That’s it. That’s the word, and it’s actually pretty expansive and inclusive at the same time. When I left college, people actually used that word a lot. And it pretty much covered it. Banking, trading, much of the business world in general revolved around that single word, finance.

For those that know about the television game show Password, I think this goes from what once was probably an easy word to guess based on clues to now being a much tougher guess. Why? Well, we’ve added a bunch of words and abbreviations that people might use as clues or guess as an answer. Words like FinTech, TradFi, CeFi, and of course, DeFi. Let’s examine these terms that seek to draw hard lines between them rather than just use them as place holders while we work our way back to ‘Finance.’

First we’ll clarify the abbreviations: FinTech [Financial Technology], TradFi [Traditional Finance], CeFi [Centralized Finance], DeFi [Decentralized Finance]. I’ve listed them in what I’d consider chronological order so we’ll start with FinTech. I think this term really grew up when the ‘West Coasters’ helped make the internet a part of our daily lives. This crowd wanted to prove that they were different from their stuffy East Coast counterparts. You know, the ones wearing suits, ties, and wing tip shoes (yes, I owned a pair and still have them as a souvenir). Now mind you, as a futures trader in the pits, we really didn’t fit that mold, but we’ll leave that detail out of it. The story sounds better this way. Think about those people out there on the West Coast that were inventing all this cool shit that would make it even easier for you to constantly give companies your money…and unfortunately all of your most private information. The Steve Jobs of the world did not want to be grouped with the stodgy Solomon Brothers and Goldman Sachs crowd. They were way too hip for that.

When I think about FinTech, I actually attribute it’s start more to your credit cards and the ability to get cash from a machine. Here we may have nailed the first real example of the bifurcation or branching of this whole money and finance thing. Now you could go to companies working directly with people’s money, but in technological ‘Tech’ ways. But if you help someone transact with money and buy a pair of shoes, isn’t that something that really involves the same type of transaction as buying stock, which was clearly associated with ‘Finance?’

Next in my order comes TradFi. What’s interesting about this is that it wasn’t always part of the Finance vocabulary. It possibly took hold after DeFi, and while the logic of this order actually doesn’t necessarily make sense, that is how I remember using the terms. It’s pretty simple to understand these abbreviations. TradFi is traditional finance. It’s almost used in a derogatory manner by the crypto or digital crowd. Why? It’s just so yesterday. Paper money, stock certificates, bonds with tear off ‘coupons’ to claim your interest payment. How can anyone find that efficient. So it all went electronic; blackouts, internet outages be damned. We’ll come back to my core problem with all of these abbreviations in a bit, but let’s understand them first.

What followed next is part of the recent technological and digital (r)evolution of money that revolves around blockchains and digital currencies as well as other transferable assets, e.g. Bitcoin and Ethereum respectively. We’ll go with CeFi first. This one is interesting to me because I’m not sure I remember it being used really before people started saying DeFi. CeFi is centralized finance. Go back to all those old ways of doing things. Government control of the ‘money supply.’ International currency fluctuations. And everyone’s long-time favorite (including my own), Gold. All of the above are transacted and exchanged in a ‘Centralized’ manner. That centralization revolves around governments, banks, and exchanges. Transactions are conducted in such a way that the payment still passes through one of those government run, or at least affiliated and regulated institutions.

Last, let’s look at what can pretty much be thought of as the Wild, Wild, West. DeFi! This where the party is, or at least the place with the ability to do the most, sometimes not yet knowing if you’re really ‘permitted’ to transact that way. I’m not going to get into the crypto debate around whether or not this should really be permitted. That’s a Political Science discussion, yes, my major, around how to build your society. With all the people yelling about the future of DeFi being the new world, one could argue that the barter systems that supported societies for thousands of years were pretty much DeFi. You want something I have that has value, and I get some sort of value in return.

So why do I refer to it as the Wild, Wild, West? Because the rules that are beginning to be put into place by, yes, those same centralized government bodies and are being written more out of necessity than a desire to give up centralization. Crypto and digital assets have arrived and people are exchanging them. And many of them are now choosing to do it on a one to one, or peer to peer basis. Or, they’re doing it on decentralized exchanges, and I’m not really sure why that’s not an oxymoron at least. No matter, the governments are, as is their job, creating laws to protect people from each other and to some extent, themselves. Maybe we should discuss that last sentence in a blog around online gambling…another day.

Now to one of my pet peeves about all of these terms. ‘Fi’ always comes second. Maybe it was a way for the ‘cool kids’ to differentiate themselves; bring the focus to the technology side of things. And that’s a problem. Why? Because it allows the builders of these products to de-emphasize the Fi part and that’s a bad thing. Fi is people’s money. And I have tried to always remind my teams that after their family, people probably put money as the second most important thing. Not everybody, but on some level we all have to think about our money. Very old fashioned like gold, or just old fashioned like government-controlled currency, or new age money; digital currencies. People care more that it’s money than they do about any of the ‘Fi’ differentiators. And if you are building a product involving money you better care about your customer’s money as much as they do. I’ve seen the other side. Companies blow up.

I once spoke to someone about a job at So-Fi and asked point blank whether they considered themselves a Tech company or Finance company first. The answer was a Tech company. Tech was definitely the wrong answer. I immediately knew it wasn’t a match. Even the company tagline is ‘Get Your Money Right.’ It isn’t, hey play with all this cool technology on the phone. They’re selling money services, not tech. Tech is merely a means to an end, so why focus on that first. We’re talking about money here, the time for jingles and cool commercials is over. Is my money safe with you? Can you help me make more?

And that’s it. That’s what? That’s FINANCE. One long established, well understood word; finance. It means money. The sooner we start looking at all of this stuff as just that, the Less confusing it will actually become. And the more accepted. After all, isn’t that what all these companies say they really want? I’m waiting, and I’m ready. Hopefully, if no one else has gained anything from this installment, I’ve at least made all the Finance majors out there happy.