Ethereum is a public blockchain which keep records of digital transaction. It is based on the principle of blockchain, where blockchain is only used for the safe transaction of cryptocurrency Ethereum can be used for any kind of transaction made online. It is public, decentralized i.e doesn’t require any central authority. It’s immutable i.e it is hard to break in, it can only be accessed by a key. The transactions made in Ethereum is verified by a miner. Every-time a block is proved by a miner an ether is generated and awarded. Ethereum uses an intrinsic digital token called ‘ether’.
How is it being used?
Decentralized Finance –
A system that is built on blockchain or Ethereum, an open source network that can be used to make monetary exchange. Why should it be used?
- It is decentralised, records are kept simultaneously across thousands of computers.
- Permissionless, anyone in the world can access it.
- Trustless, a central authority is not required to verify transactions.
- Transparent, all transactions are made publicly.
In this system participants will access to the decentralized app to participate in global market. Anyone with internet and a smartphone can use these apps. In such a system, a farmer in india can connect with a trader in united states. In the current system it is expensive to send money across borders however with DeFi remittance fees will be eliminated.
In the current system all the user information is stored in server farms which puts it at risk of theft, arson etc. however in DeFi a user has full custody of their wealth and can securely make transactions without watch of a central authority. No one can steal or have access to their wealth without a key. All transactions are immutable.
In a decentralized financial system, transactions are immutable and blockchains can’t be shut off by central institutions like governments, central banks, or big corporations.
The only disadvantage of DeFi is volatility of digital currency how this has also overcome by “MakerDAO” which through the use of elaborate ethereum smart contracts has enabled the creation of stable coin “Dai” that is backed by ether os always worth $1. It is an open platform that can be used by anyone, provide high quality financial service with fair credit for everyone.
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