Over the past few months, there has been a shift towards digital platforms therefore the much-anticipated shift in digital financing was also seen. This shit in digital financing introduced a new concept called decentralized financing or DeFi. This concept is linked with cryptocurrency and after the launch of Bitcoins in 2008 other cryptocurrencies were also introduced in the market therefore a method of financing had to be introduced which would help in increasing the monetary value of these cryptocurrencies. As a result, decentralized financing came about which is aimed at providing services targeted towards blockchain. Keeping in line with the nature of digital currency, decentralized financing is also accessible in all corners of the world. In this article, we will explore how decentralized financing has aided the growth of Bitcoins and cryptocurrency in general.
WHAT IS DEFI?
When we talk about DeFi, we are talking about a form of financing that limits and sometimes completely prohibits the intervention of financial institutions and government regulatory bodies in matters regarding cryptocurrency. this means that activities that involve transactions made to Bitcoin to any other form of digital currency will not have any rules or regulations imposed on them.
This means that financial intermediaries like banks, brokerages, and exchanges do not have the authority to monitor these transactions or question their authority. This could also be seen as a disadvantage as digital currency could be involved in transactions related to illegal and illicit activities like purchasing through the black market. However, there are some major advantages of incorporating digital financing into cryptocurrency and we will discuss them in the next part of this article.
BENEFITS OF DECENTRALIZED FINANCING
As mentioned earlier, there are some major advantages associated with the use of decentralized financing. it gives a very practical touch to digital currency and provides a number of real-world benefits that e-wallet holders can benefit from. first and foremost, cryptocurrencies are liberated from the intervention of regulatory authorities so cryptocurrency holders enjoy greater freedom when it comes to financial transactions. Since there is no intervention by financial authorities, people who have access to bitcoins and other cryptocurrencies have control over their wealth and have complete sovereignty and democratic control.
In addition to this, DeFi, similar to digital currency, can be accessed in any part of the world therefore it has greater reach and is extremely feasible and convenient for anyone with an internet connection. People do not have to go out of their way just to gain access to their accounts and the wealth that they have accumulated in their accounts. Since DeFi is aimed at ensuring a seamless experience for bitcoin and other cryptocurrency holders, it also ensures that there are strict security measures in place. This is made possible by encoding the system with codes that are hard to break and keeps data and the currency safe from prying eyes.
DECENTRALIZED FINANCING IN 2021
The main goal behind the introduction of decentralized financing was to take the middle man out of the equation. There are different DeFi platforms that offer a variety of services and these services can range from very simple functions to some very complicated processes that simplify your transactions. The features of DeFi platforms include the following:
- DeFi platforms provide cryptocurrency exchanges and brokerages freedom from central authorities.
- Enables users to borrow and land Bitcoins
- Transaction processes are quicker and more efficient
- Uses the process of tokenization to improve asset management
- Assists in devising predictions regarding different asset classes
CONCLUSION
From the very beginning cryptocurrency has gained a lot of popularity and seems to be moving in the direction of replacing real-world currency. One way that cryptocurrency, especially bitcoins have replaced real-world currency is through trading and if you are considering bitcoin trading as a way to earn profits then we would recommend you to visit CRYPTO GENIUS and explore their trading platform. Moving forward, decentralized financing can provide economic freedom which will allow large scale and small-scale businesses based on cryptocurrency to flourish, as there are fewer authorities knocking on their door to question their activities. As a result, financial markets could be elevated due to the incentives that are provided by decentralized financing.
