DeFi: The Emerging Challenger!
By Shubham Joshi
DeFi or Decentralised Finance is a term gaining popularity in recent times, as the platform has attracted lot of capital inflow, particularly post Etherum’s Shapella upgrade. The move was triggered by token holders preferring DeFi platform over centralized exchanges (CEX) in their effort to capitalize on the new opportunities and possibilities enabled by the upgrade.
Decentralized finance (DeFi) is an emerging financial technology based on secure distributed ledgers similar to those used by virtual digital assets or cryptocurrencies. It has emerged as a preferred choice given the benefits it offers to investors in terms of costs and ability to tide down risks associated with security such as hacking and other technological raids.
In the U.S., the Federal Reserve and Securities and Exchange Commission (SEC) define the rules for centralized financial institutions such as banks and brokerages, which consumers rely on to access capital and financial services directly.
DeFi challenges this centralized financial system by empowering individuals with peer-to-peer digital exchanges.
DeFi eliminates the fees that banks and other financial companies charge for using their services. Here, individuals hold money in a secure digital wallet, can transfer funds in minutes, and anyone with an internet connection can use DeFi. It’s that simple!
DeFi takes the basic premise of Bitcoin — the digital money — and expands on it, creating an entire digital alternative to Wall Street, but without all the associated costs (think office towers, trading floors, banker salaries).
This has the potential to create more open, free, and fair financial markets that are accessible to anyone with an internet connection.
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