DeFi: The future of global economy
A revolution is coming, that people in decades and centuries to come will remember as one of humanities greatest inventions. It’s called Decentralized Finance!
As we aim to understand the importance of Decentralized Finance (DeFi) and its usage in a broader perspective, we need to define it in the simplest terms possible. DeFi refers to a digital financial exchange without any middleman involved. In other words, a business transaction between two or more participants, can be executed without involving a bank or a financial institution.
On top of the blockchain lays DeFi. Encapsulated within, one can find that the infrastructure layer is known as what we call “the Blockchain” and DeFi is viewed as a cluster of second layer applications. Thus, allowing the core property of decentralization to be inherent by DeFi, of course this is only true if the blockchain is decentralized by nature.
What makes decentralized finance unique and appealing?
Some of you have heard of Bitcoin… unless you ‘ve been living under a rock! The mysterious and original crypto asset is basically a ledger (its blockchain), where transactions are securely recorded in databases, scattered across computers. Cryptography on the computers help not only to secure but also to prevent any tampering.
The ancient Greeks had a rule; once a governing body was too big, they would get kicked out of Athens. In a Bitcoin world, no single party is in charge. Everybody is equal, an accessible currency and a currency without borders. A smart currency, imperative for the future. If a central authority manages to prevent to withdraw the support of Bitcoin, it will still live on. Not just a tulip bulb, is it @JamieDimon?
Blockchain has proven to be a true innovation with state-of-the-art security; whilst being a Distributed Ledger Technology (DLT). DLT is not only a protocol enabling the secure functioning of a digital database in the decentralized space, but also includes the idea of a distributed network eliminating a need for a central authority to check against manipulation. Additionally, cryptography can be used to access “keys” and signatures, storing the information safely and accurately, while becoming an immutable database.
Hence, that’s how finance and technology can be mixed into DeFi’s new era, reshaping the whole financial system’s structure, from its services to its markets.
Wouldn’t it be nice to have an ecosystem with clarity, transparency, and efficiency? The art of decentralization allows for true worldwide participation, high speed, and low-cost transactions, which can all be implemented by DeFi and its applications within the digital asset space.
To conclude, the future is here. Still nascent, but the baby is born. At your doorstep can be found the latest and greatest of what the 21st century has to offer.
