Decentralized Finance: What It Means

There is a new word that is gaining as much popularity as cryptocurrency itself: DeFi meaning Decentralized Finance. DeFi is a new monetary system that is being built on public blockchains. Open-source networks such as Ethereum allows anyone to create applications to allow financial transactions without involving centralized institutions.

Decentralized networks mean that there are thousands of identical records kept on thousands of computers through a peer-to-peer network. The result of this is that there will be no point of failure, no downtime, or missing records. Decentralized networks were created to bridge the gap for the 1.7 billion people who have no access to financial services.

These networks are permissionless and open-source, it is not dependent on the location of the individual. With traditional banking and payment systems, it is possible for an individuals account to be closed by the institution, however, blockchains are censorship-resistant. Now, with DeFi, anyone from anywhere in the world can access financial services at lower costs.

A major solution that DeFi offers is the ability for people to send money from one end of the world to another. Foreign workers send billions of dollars each year to their loved ones back home. The charges are massive and what is finally received is little. DeFi is able to cut these costs by more than 50% and give more value.

Looking at the future of DeFi, it can only get better and adoption is now fast-spreading.

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