How Decentralized Finance Is Shaping Global Markets
With the digitization of banking and even money, financial transactions require additional security to maintain user privacy and prevent fraud. Decentralized finance, or DeFi, is changing how individuals and institutions interact with their finances online. DeFi uses blockchain technology to increase security and transparency in decentralized transactions, with no intermediary or broker being required. This new financial system offers users a new level of openness, assessability, and efficiency that fiat currency does not.
What Is Decentralized Finance?
DeFi refers to financial services backed by blockchain technology. Unlike traditional financial systems, which often rely on centralized institutions like banks and the federal government, DeFi operates through decentralized peer-to-peer smart contracts.
Smart contracts, which are automatic transactions that are executed when predetermined conditions are met, are stored on the blockchain. The nature of smart contracts provides a level of security that traditional systems do not. Transactions remain anonymous and are almost instantaneous, leaving users sure of the outcome.
Smart contracts can be used for:
- Trading
- Making purchases
- Loans
- Investments
How DeFi Is Changing Finance
DeFi has the potential to reduce the barriers to entry to access financial services, especially for those in areas where there is high inflation or poor currency …
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