What is DeFi and why are people talking about it?
What role does DEC777 ?
What is DeFi and Why is Everyone Talking About it?
Cryptocurrency’s promise is to make money and payments universally accessible– to anyone, no matter where they are in the world.
The Decentralized Finance (DeFi) or Open Finance movement takes that promise a step further. Imagine a global, open alternative to every financial service you use today — savings, loans, trading, insurance and more — accessible to anyone in the world with a smartphone and internet connection.
DeFi, short for Decentralized Finance and also referred to as ‘Open Finance’, is a set of DLT-based financial services and applications intended to augment or replace the currently existing financial system (comparatively referred to as ‘Centralized Finance’)
As those familiar with DLT, colloquially referred to as Blockchain, and its various applications are already well aware, one of its greatest promises and drivers of value is the notion that it facilitates decentralized peer-to-peer transactions without the need for a third-party intermediary and their associated fees. By bringing this technology into traditional finance system activities like payments, borrowing, or investing, DeFi has the potential to create new avenues to access these services.
DeFi continues to play an important role in the evolution of the financial sector for many reasons. For one, DeFi expands the functionality and reach of money. Since all you need to participate in the DeFi sector is a Smartphone, there is huge potential to expand the global economy. Consequently, analysts see this sector as one of the most important currently under development in the crypto space.
This commitment to the development of a DeFi ecosystem is easy to recognize. Importantly, DeFi is the fastest growing sector in blockchain. According to recent reports, DEFI tokens continually outperform their counterparts. Additionally, since this time period represents the beginning of this integration stage, the market now possesses the unique opportunity to see an entirely new industry blossom.
According to an infographic put together by Visual Capitalist, there are five major impacts that DeFi will have in its quest to help shape the global financial system for the better:
· Wider global access to financial services. Currently, 1.7 billion adults worldwide remain unbanked and have zero access to a financial institution. Decentralized Finance should help to tear down the status, wealth, and location barriers to prevent global access to the financial world most developed nations take for granted.
· Affordable Cross Border Payments. By eliminating the need for certain intermediaries, DeFi services are predicted to lower the average global remittance fee from its current, often prohibitively expensive 7%, to a much lower 3% average.
· Improved Privacy and Security. Data breaches at centralized institutions, like the May 2019 breach of First American Financial exposed approximately 885 million personal and financial records. By definition, a decentralized system does not have a centralized single source of failure that would allow for this type of breach to occur.
· Censorship resistant transactions. A (full) DeFi system cannot be censored or shut off by governments or large corporations. A system such as this can bring a sense of stability and an alternative option in nations where existing governments and financial institutions may be corrupt or untrustworthy.
· Simple apps. In efforts to bring their services to the mainstream, developers of these new DeFi applications will focus on creating a smooth and intuitive user experience to allow any user to take full advantage of the new system that is being put in place.
While each of these benefits are powerful in their own right, their combination can really bring profound implications.
DEC777
https://dec777.com
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DEC777’s Team
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