DeFi: What you need to know about decentralized finance!

Bitcoin and cryptocurrencies have made a place for themselves in finance. What do you mean? In fact, thehe cryptocurrencies have ushered in the new era of finance, namely decentralized finance, which is therefore called DeFi.

Casually, this new reality opens new horizons. Not just for cryptocurrency but indeed for finance itself. It must be said that this is a sector which, despite the latest developments brought by FinTech, deserved a new face or new tools.

Today therefore, when it comes to finance, it is DeFi which takes center stage with ever greater innovations and an ever larger audience.

What is DeFi?

Let's go over the basics, if you don't mind. DeFi is the idea that virtually every financial service we know can be reshaped and reinvented in a decentralized way.

Yes you have. well understood: everything that is payments, loans, borrowing, deposits, interest, wealth management, even. Everything can be decentralized using blockchain technology.

The prospects are therefore immense and the work that remains to be done is immense.

And, if the term decentralization or blockchain is still foreign to you, know that it is a way to internally improve all the processes necessary for the creation of financial services and products.

DeFi pushed the concept of Bitcoin even further, which was revolutionary in itself and still is today. Imagine an international currency, which would not be issued by a banking institution. It's still crazy to think about. Writing it myself and despite my familiarity with the product, I am still speechless, so to speak.

That said, Satoshi Nakamoto, the creator of Bitcoin gave us the bases and foundations of a new way of thinking about things and money in particular. After a decade of discovering this new monetary concept, the eco-system having been enlarged, the participants gradually contributing a stone to the building...Ultimately, it is all finance as a whole (and no longer just money) which has been integrated into this new paradigm based on decentralization.

DeFi therefore has the challenge (yes, it is unintentional, believe me) of integrating both the world of cryptocurrency and that of finance, using blockchain technology.

What does DeFi actually look like now?

Reading these few lines, you are wondering what the current operational services of DeFi are, right?

Well, rest assured, we will not speak in the past tense as is slightly the case with artificial intelligence where many of its applications are still "in progress". No, here, with the blockchain, we will see projects and applications that actually exist.

DeFi services have been operational for about two years and the market continues to grow. For example, the total amount of Ether on the DeFi market has exceeded $1 billion as of this writing.

When I told you that the market was huge, I forgot to point out that this is only the beginning.

🙂 Most of these funds are used in lending and borrowing platforms. It is indeed - today in any case - the flagship of DeFi.

That is to say that the main sites of decentralized finance concern monetary lending sites (crypto or FIAT). These are sites where users can borrow cryptocurrencies or fiat money (euro, dollars etc.) with interest rates. At the same time, users holding cryptocurrencies deposit their funds there in order to generate interest on their capital.

Wonderful, isn't it?

DeFi, understanding decentralized finance — **the blockf** is a perfect example of what a decentralized finance site is. A site where you can earn interest and borrow crypto or FIAT.

Or is this a superlative worthy of an early crypto enthusiast? Well, the time has come to quickly tell you the advantages of decentralized finance.

Likewise, many centralized platforms like Binance have a foot in both types of finance.

Why are decentralized finance sites a blessing for customers – compared to traditional finance sites?

Although I enjoy writing about this topic, the bullet point will be necessary here to mark how radical the benefits are (thanks to decentralization):

Speed of fund transfers (we are very far from endless time what a traditional bank can take to grant a loan).
Absence of administrative papers and no administrative burden (to register, the process takes just a few clicks. The validity of customer profiles is achieved through an online process. This allows you to send your supporting documents and identity papers in one click).
Access 24/24, 7/7: No agency, no appointments, no clumsy or incompetent employee. Access to its funds and wallet is possible for each client.
Security of funds : There, even if it is (it was) the Achilles heel of cryptographic funds, all sites know how to protect themselves today and customers too from hacker attacks. Then, here again, traditional finance is not safe from hacker attacks either.
Ease of borrowing and equality of customers : In traditional finance, each client is judged on their financial past. Here, blockchain puts everyone on the same page. Everyone can borrow (within the legal framework in which the company is authorized to operate), without any discriminatory rules. In times of Black Lives Matters, this is a consecration.
Platform reliability: To borrow, a person will have to post collateral in terms of guarantee. No bad payers, no bad players. We only get what we have. Not only do these DeFi platforms encourage customers to hold onto their assets, but it also allows them to raise additional funds. Although the services in decentralized finance are companies (and intermediaries), they rely on decentralized technology.

In fact, with a little hindsight, we could add many more advantages but this would affect other areas, which are at the intersection between finance and economics.

So here is a simple little article to quickly explain what DeFi is and what decentralized finance entails.

The subject is still vast and relatively complex. Of course this is still a new field, and the possibilities are still very great.

💡 Likewise, we can already see how decentralized finance could improve the economy of many countries and I am thinking particularly of Africa. To the extent that the continent has already learned a lot and improved its overall economy thanks to FinTech innovations, it would seem that DeFi, decentralized finance, would come as the icing on the cake.

We, who know – Covid crisis obliges – the hints of traditional finance which seems to be running out of steam, not to say suffocating…

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Note: No financial advice is given in this or any other article on zonebitcoin. This is information of which you are the sole judge and master. Be responsible with your investments and only invest as much as you are willing to lose.

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