I like taking online courses, some of them are very helpful, and what I like more is sharing what I have learned.
From a course about Decentralized Finance (DeFi) I broke down every single information in an organized way, I hope you enjoying reading it.
What is Decentralized Finance? (DeFi)
DeFi is a new type of financial system in which secure blockchain actually are used and allow what are effectively decentralized peer-to-peer transactions, which means that it allows people to conduct transactions directly rather than go through a third-party. This financial system takes away a lot of controls and restrictions from the financial sector.
Primary features of DeFi
Unlike the traditional financial system Bank and other financial institutions, DeFi minimized the fees to the lowest level while other financial institutions, Banks for instance impose fees, additionally instead of making a bank deposit you can just keep it in a secure wallet, another point is that you don’t need any permission to open an account it is simple and easy, it is a truly peer-to-peer network, ultimately the funds transfers can be done in just seconds without waiting for days, not anyone can open a bank account but with DeFi concept there are no restrictions.
The difference between Centralized and Decentralized Finance
Centralized Finance is a type of financial practices like borrowing money, receiving interest on the digital assets like Bitcoin, Ethereum, USDT … and more all of these practices can be done through a centralized platform, on the other hand Decentralized Finance employs Blockchain technology and function on the Ethereum network, which means that automated contracts don’t need banks or any third-party to carry the action, nobody has access to the money.
What issues does Decentralized Finance solve?
Without a third-party the control will be no longer centralized, no organization will be in charge of rates and fees, it can also solve a problem that i personally care about because I have a lot of friends that suffer with opening a bank account, so regardless of your location or your background with DeFi this problem is solved, another issue that can solve is increasing transparency, with the blockchain concept the ledger is public and everyone has access, others issues can DeFi solve are inefficiency and the high cost as I mentioned before the fees problem, the more challenging issue is sending money overseas, it can be costly and difficult, so these are the main issues that DeFi can solve and they are not all of the issues.
You can find all the information in details from the link bellow.
