What is DeFi, Will it change the future of finance as we know it
Decentralized finance or DeFi, is the new building block in blockchain finance. Today aside from sending money from one to another, We use a variety of other financial services.
For example, loans insurance, saving plans and stock markets, are services that are built around money and together create our financial system.
Today our financial system and its services are fully centralized. Which means it relies on a central authority.
These CFi (Centralised finance) has its own risks, miss management, fraud or corruption to name a few. But what if we could decentralise the financial system as a whole in a same way that Bitcoin decentralised money. That’s exactly what DeFi is all about!
DeFi is a term given to financial services that have no central authority or someone in charge. Using decentralize money or certain cryptocurrency that can be programmed for automotive activities, we can build exchanges, lending services, insurance companies that don’t have any ownership or are controlled by anyone.
To create a decentralized financial system. The first we need is an infrastructure for programming and running decentralized services. Luckily Ethereum does just that.
Etheruem is a DIY platform for writing decentralized applications known as well, Dapps. Thanks to Ethereum, we can write a smart contract that determines the rules of how some services will work and once we deploy those rules on the Ethereum network, we no longer have control over them, They are immutable.
Till now once Ethereum is in place, we can start building the decentralized apps, but here is the building block that comprises it.