DeFi — The 5-year old definition
Hey buddy, I’m glad to see you again. Remember my post on Smart Contracts?Everyone loved it, especially because of how simplified it was for anyone to understand.
So guess what, today’s my birthday and I got one of the cutest things from a friend, are you thinking what I'm thinking?
Yes, exactly what you were thinking! Someone wrote me a birthday note, I mean that’s something I almost didn’t think still exist. I had a good and great day anyways and I’ve come to share a little note with you also.
So, let’s look at what DeFi is;
DeFi is short for Decentralized Finance. This basically means that anyone can buy and use financial services and products without validation or permission from any authority, unlike the standard financial platforms where authorities are involved in every transaction.
Anyone with access to internet and can digitize their assets, especially using Ethereum, can manage and transact on their own, without uploading or requiring any personal information.
Now my 5 year old still doesn't understand what DeFi is, but I’m about to make it clearer to him.
Jeremiah and Oluwaseun are brothers who both love gadgets and are tech savvy, now both of them want a MacBook Pro 2021 M2 to help improve their productivity at work.
Both brothers are from Nigeria, a country in Africa which still has most of its system controlled and governed by authorities.
Jeremiah checks Amazon and finds the MacBook Pro is available and would like to purchase it, meanwhile the conversion rate of dollar to his currency (Naira) triples the money and his payment platform has daily international transaction limit. Wanting the MacBook Pro so bad, he proceeds with the purchase and the authorities hold the transaction and asks to validate his identity and other information and he can’t get the MacBook Pro with so much enthusiasm again.
Meanwhile, Oluwaseun on the other hand is also aware of all of these laws and regulations and has digitized his money into Cryptocurrency, Ethereum to be specific. He proceeds to Amazon also and sees the MacBook Pro, checks the payment method and confirms he can pay using his cryptocurrency. He proceeds to purchase the MacBook Pro without any restriction, laws, regulations or any authority getting involved. He managed his own transactions and didn’t require any personal information of sort to transact.
Now, I ask my 5-year old if he’s still confused about what DeFi is and he replies “Daddy, why didn't Jeremiah digitize his own money to avoid all the troubles he went through?” and I replied, that’s because Jeremiah didn't have knowledge about DeFi.
In years to come, there will be a bloom to such modern technologies and one must always be aware of emerging technologies that's gonna bring about a change in the way we communicate and transact. The Future is very bright with launch of new technologies like DeFi and one must keep learning and growing.
It’s been wonderful having you here again, I look forward to sharing more conversations of my 5-year old with you.
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