Waht is defi

What is DeFi or Decentralized Finance
DeFi seeks to develop small traditional financial pieces but with an extra degree of transparency and decentralization. These small pieces, as if they were Lego pieces, can be combined with each other, in order to develop an entire ecosystem of small solutions that together form a great solution for finance that invalidates the need for centralized and opaque financial financial institutions that they no longer add value. Uniswap clone
That is the idea that has driven the creation of the term “DeFi”, and the one that has led its evolution to the current point. In fact, it is currently impossible to ignore the huge impact that DeFi has on the crypto world. For that reason, we open a space to learn what DeFi is and how this idea is changing the global financial world.
DeFi, the idea that is changing the financial world
Imagine a world where anyone could create transparent, fair and efficient financial products, causing banks, large finance companies, lenders and insurance companies to recede into the background, or better yet, become completely unnecessary and disappear. But also a world where anyone can interact with these products freely.
Well, this is what DeFi is. That is to say, it wants to convert the centralized finance structures that we have now, into decentralized structures, without trusted third parties, executed on smart contracts or intelligent contracts , within a blockchain where a written and unalterable record of each action carried out is transparently reflected. . Uniswap clone script
The impact of a trend like this is gigantic. We are barely in its early years and already the creativity of the world community is shaping alternative versions of almost all existing financial products.
Advantages of decentralized finance
They allow access to financial services by millions of people who do not have assets in the bank, an opportunity for those who want to have financial freedom and who have not been able to enjoy these services.
It develops a new point of economic diversification and development since they have great potential in cryptocurrencies such as Bitcoin.
It facilitates the international financing of companies . They adjust to the needs of a target audience to bring development and investments to any place in the world in a safe way.
Origin of DeFi
If you are one of those who think that DeFi originated with the birth of Bitcoin, you are right, Bitcoin is definitely the first DeFi platform in the world. But the origin of the idea is much older.
Nick Szabo was pointing, perhaps without knowing it, to the birth of DeFi when he presented his idea of smart contracts in the year 1995. That is 13 years before the creation of Bitcoin, an idea certainly ahead of its time. decentralized exchange script
However, it was not until the arrival of Ethereum in 2014 that this idea was radically changed. Ethereum and its smart contracts allowed developers to create anything they could imagine on top of a blockchain. And precisely that what started as an experiment is now becoming a movement in itself, in a decentralized financial ecosystem that operates billions of dollars every month.
Disadvantages of decentralized finance
Security continues to be a subject of debate within DeFi platforms. Blockchain seems to have proven to be a secure technology, but there are still loose ends regarding security in Smart Contracts .
Cryptocurrencies can be volatile, even though DeFi platforms have created secure operating mechanisms. This may be insufficient and may not protect the entire ecosystem from potential fluctuations. Uniswap clone software
How does decentralized finance work?
Multiple technologies and protocols are used to achieve the goal of decentralization. For example, a decentralized system may consist of a combination of open source, Blockchain, and software technologies.
In this part, Smart Contracts , which automate the terms of the agreement between buyers and sellers or lenders and borrowers, make these financial products possible.
Regardless of the technology or platform used, DeFi systems are designed to eliminate intermediaries between the transacting parties.
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