What Is Decentralized Finance (DeFi)?
Decentralized Finance (DeFi) is a Financial service on public blockchains, based on secure distributed ledgers similar to those used by cryptocurrencies, DeFi is an open and global financial system built for the internet age.
With DeFi, the market is always open and there are no centralized authorities. who can block payments or deny you access to anything services that were previously slow and at risk of human error are automatic and safe, they're managed by code that anyone can inspect and scrutinize.DeFi is global, peer-to-peer pseudonymous, and open for all.
With DeFi you can hold your money in a secure digital wallet instead of keeping it in a bank, you can transfer funds in seconds and minutes, it eliminates the fees that banks and other financial companies charge for using their services.DeFi remove third parties in financial transactions
Stablecoin, Software, and hardware are the components of DeFi that enable the development of applications.
How does it work?
Users engage with DeFi via software called daaps are used to handle transactions and run the blockchain, in the blockchain, transactions are recorded in blocks and verified by other users. if verifiers agree on transactions, the block is closed and encrypted; another block is created that has information about the previous block within it.
The blocks are "chained" together through the information in each proceeding block. information in previous blocks cannot be changed without affecting the blocks, this process along with other security protocols.
What are the benefits of DeFi?
- You don't need to register for a new account, instead, you just get access by creating a wallet.
- it's secure you don't need to provide your personal information such as name, email, contact number.
- You can transfer your assets anytime, anywhere without asking permission and paying expensive fees.
- DeFi is transparent, everyone can see the full set of transactions
Why DeFi is so important?
The aim of DeFi is to create an open financial market that is trustless and permissionless. Significant development and investment have been placed into the advancement of Defi, and as financial advisors, it's vitally important to have an understanding of decentralized finance and to be prepared to interact with and rely upon it this app