Defining DeFi: What Is Decentralized Finance? (technically speaking)

Blockchain is enabling DeFi, a completely democratized access to financial services. Entire new industries are being built on top of DeFi and blockchain.

DeFi sounds good, right? The promise of building a Decentralised Finance ecosystem that can reach billions of people worldwide that remain unbanked. This is a huge problem, and its root cause is the largely centralized structure of the institutions that make up our traditional financial system.

DeFi is a great trustless alternative that offers the users greater control over their money. Financial instruments like loans, insurance, and derivatives that are presently controlled by big organizations will witness these middlemen’s elimination.

The anonymity that blockchains ensure will also enable faster borrowing and lending of money without any need for trust in the form of KYC or credit scores.

In simple terms, DeFi can be defined simply as an open or decentralized financial system that’s devoid of a centralized setup in which powers are in the hands of a few powerful organizations such as exchanges or banks, with the help of blockchain technology and smart contracts.

Thanks to DeFi, existing financial instruments (like loans, savings, trading, etc.) can now be accessed in a decentralized, trustless manner by anyone, anywhere in the world. This…