Is Decentralised Finance the next big thing? Let us find out!
One of the hottest topics of 2020 and 2021, obviously after the pandemic, was the buzz created by DeFi. Right from Dogecoin’s price hitting sky-high to Bitcoin or Ethereum, the DeFi backed cryptocurrency sector definitely outshined amid the blues.
But, do you really know what it means?
And, does it really hold importance to become the next big thing?
Well, let us find out!
Technology is one thing that is ever-evolving and is not stagnant and in recent times one of the significant changes in this regard is the transition from centralized internet services to decentralized ones. The fact that people are slowly accepting and welcoming it with open arms is good. For those who are confused, the term centralized services refer to those sets of services that are run by firms or organizations like Twitter, Facebook or Amazon. These companies follow a structure wherein a boss handles the employees and a proper flow is followed within the set-up. This goes without saying that any kind of change in such centralisation is done after a lot of deliberation and thought. Similarly, the banks in most countries like ours follow the centralized system where the main body (in form of government) looks after and commands their functioning
On the contrary, decentralized services can be understood with the example of, World Wide Web that is simply a set of protocols with a huge amount of other stuff built on top of it. Similarly, cryptocurrencies like Bitcoin also operate in a decentralized way. Give below are major f differences between decentralized finance (DeFi) and conventional centralized systems:
- The first of foremost difference is the fact that at their very core, the operations of these businesses are not looked after by any institution or the employees or even a third party. On the other hand, the rules are written in code often called a smart contract in technical terms. As and when the smart contract gets deployed to the blockchain network, the decentralized dApps can operate themselves with no intervention from the third party.
- The written code is completely transparent on the blockchain and anyone can audit it. This leads to building a different level of trust with users of the blockchain network because they can easily understand the operations or the functionality. Every transaction activity taking place within the blockchain is absolutely public but it has nothing to do with the real-life identity of the users.
- Decentralized finance or its process of work spans the globe. From the US to India, Texas to Tanzania, the services enabled by the Decentralized Banking system can be accessed by users present anywhere around the globe. The only requirement is that of a decent internet connection.
- Absolutely, anyone can participate or create the DeFi applications. Unlike the conventional centralized system, there are no gatekeepers or third parties involved. The users present within the network can interact directly with the smart contracts (written codes) through their crypto wallets.
- The user experience is flawless and flexible as they can either use the third-party interface or build their own as well.
Finding out whether Decentralisation Finance is the next big thing or not?
A simple answer to this question is definitely yes! It is unstoppable. Wondering, how and why?
Decentralised Finance is not powered by the proliferation of written codes or borrowing applications. Rather, it is powered by the backbone of decentralization that gives control to the users within the network. Every one of us deserves to have access to financial services with security and transparency. Decentralised finance is a technology that acts as an added functionality to the conventional centralized institutions. So, it is the next big thing!