Investing in Decentralized Finance for Passive Income: Yield Farming Explained
In this article, we will deep dive into the new and growing world of decentralized finance. I will explain to you how decentralized exchanges work and how you can participate in them to earn passive income for the money you invest. I am not here to give you investment advice, I am here solely to break down what yield farming in decentralized exchanges is and what could be the risk associated with this type of return on your crypto assets. Even if you are not familiar with the world of cryptocurrencies, I will guide you through this journey starting from the first Bitcoin transaction in 2009 to the decentralized world of finance today.
Back to Basics: Bitcoin
The world of Decentralized Finance or DeFi started on the 12th of January 2009 with the first-ever Bitcoin transaction. It was the first time two individuals send money to one another across the network without the need for a central authority. On “traditional” days, when you buy a book online, you are trusting your bank to remove no more than the price of the book from your account and add it to the seller’s account. Our entire banking system is built on trust. The breakthrough of Bitcoin was that trust became distributed, so you don’t actually need to trust a central entity anymore to transfer value. Instead, you…
