đ Decentralized Finance (DeFi) is the Future
Exciting times are ahead: In the foreseeable future, financial and economic services will run on Distributed Ledger Technology (DLT) â a decentralized database managed by multiple participants, with no central administrator.
Like the internet, which has become such a pivotal part of our everyday lives that we cannot imagine life without it, so too will Decentralized Finance (DeFi), and DLT, the technology it utilizes. When we use the internet, we don't ask how it works or why we should use it; we simply use it for the mobility, flexibility, efficiency and connectivity it provides. The COVID-19 pandemic has underscored the Internetâs benefits. It enabled us to connect to services, products and people and facilitated a smooth transition to a remote, contactless global economy.
Now Web 2.0 â the Internet, is evolving to Web 3.0 â Distributed Ledger Technology.
đ What is Decentralized Finance (DeFi)?Â
The core idea of DeFi is to take complex financial services and products traditionally offered by legacy financial institutions, codify their component rules and procedures, and convert them into self-executing code.
Simply put, these are automated, self-executing products and services, where the user/consumer directly interacts with the application, without the interference from any third party intermediaries such as banks, insurance companies, agents, etc. The benefits are a 24/7, instantaneous service with very low to no cost.
As the technology matures and projects are tested and examined thoroughly, DeFi products and services will become compliant and secure and with the appropriate auditing and monitoring, to ensure usersâ security and privacy. This is essential for any technology to become mainstream.
This transition is taking place, and DeFi shouldn't be thought of as an interesting concept, but an active transformation that is taking place as we speak. DeFi is indeed the future of finance.
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