How does Decentralized finance change how Finance is usually done? The answer might be simpler than you think.
Decentralized finance, or DeFi for short, is a rapidly growing and innovative area of the financial sector that is built on decentralized networks, such as blockchain technology. These networks operate on a peer-to-peer basis and are often open-source and transparent, which can help to increase trust and accountability in financial transactions.
People who often engage in DeFi know very well of its great earning potential and its opportunity for anonymity. We currently have numerous articles on the best ways to earn in DeFi. In fact, DeFi has primarily propelled its growth through its earning opportunities.
These earning opportunities have spurred on numerous financial gurus on the internet that provide just that – quick innovative ways to earn on DeFi protocols(perhaps a talk about this will be more suited to a separate article). This article will remind you of the most vital aspect of what Decentralised Finance really offers to most people.
What makes DeFi really important
The most vital key benefit of DeFi is that it can make financial services more accessible and secure. DeFi platforms(such as PancakeSwap and Osmosis) can be accessed by anyone with an internet connection, regardless of location or financial status, and decentralized networks are generally less vulnerable to fraud and hacking compared to traditional centralized systems.
In addition, DeFi can enable faster and cheaper financial transactions, as it bypasses traditional intermediaries such as banks. This can make financial services more efficient and cost–effective for both consumers and businesses.
For example, DeFi platforms can enable individuals to borrow and lend money directly to each other, rather than going through a bank, which can result in lower fees and faster transaction times.
DeFi can also enable decentralized exchanges, where individuals can buy and sell cryptocurrency and other assets directly with each other, rather than going through a traditional exchange.
Furthermore, an underrated aspect of DeFi does not require a bank account or credit history, it can make financial services more accessible to people who may have been excluded from traditional financial systems.
This can be especially important for individuals in developing countries, or those with limited access to traditional financial institutions. DeFi can also enable people to take more control over their own financial affairs and make their own financial decisions, rather than relying on traditional financial intermediaries.
This can give individuals more flexibility and autonomy in managing their finances and planning for their financial future.
Despite the many benefits of DeFi, it is important to note that it is still a relatively new and rapidly evolving field, and it comes with its own set of risks and uncertainties.
Overall, DeFi has the potential to revolutionize the way that financial services are provided and accessed. It is an area of active development and innovation in the world of blockchain and cryptocurrency. As DeFi continues to grow and evolve, it has the potential to have a significant impact on the global financial system and the lives of people around the world. However, it is vital for individuals to carefully consider the risks and uncertainties associated with DeFi before investing or participating in these platforms.
Edmond is a passionate writer for Video games, GameFi and Web3. He has worked for top GameFi companies and video game/crypto news websites.