Decentralized finance, or DeFi for short, has been making waves in finance, note Earnity executives Dan Schatt and Domenic Carosa. DeFi has opened up a whole new world of possibilities by taking the traditional financial system and decentralizing it. It will continue to reshape the way individuals earn, trade, and pay for products and services.
Many people are familiar with Bitcoin, but not DeFi. While the former is a digital currency operating in its own blockchain used as a store of value, DeFi is a broad concept concerned with financial services founded on public blockchains. Bitcoin and Ethereum are financial services that allow users to borrow or earn interest in their respective cryptocurrency holdings.
Reshaping the Industry
One of the most notable benefits of DeFi is its transparency. Unlike centralized finance, DeFi is flexible because it is permissionless and more accommodating to third-party amalgamation. The transparency gives way to due diligence and decreases the possibility of financial scams and unfair or unfavorable business practices. DeFi reshapes how global users transact as it utilizes digital currencies and smart contracts that essentially rid transactions of guarantors and intermediaries. Unlike centralized finance, lending cryptocurrencies through DeFi would reap interest in minutes.
Earnity executives Dan Schatt and Domenic Carosa note that among the popular uses of DeFi is transferring money anywhere in the world within minutes and with little to no transaction costs. Global users can also enjoy higher yields when they store their money in their crypto wallets instead of traditional banks. Individuals can also lend and borrow money on a peer-to-peer level. While it doesn’t come without risks, DeFi is the way of the future. Its benefits outweigh the costs. Through a platform like Earnity, learning about DeFi, cryptocurrencies, and blockchains, disrupting leading institutions like centralized banks will be made easier and well worth the risks.