Crypto deep dives - DeFi part 1 - what is DeFi and why is it important

I have been away from the crypto space for a while and feel like I am abit out of the loop and so figured a good way to brush up would be to do some research and then share my findings with you all on my blog! I recently wrote about how the crypto space is still shadowed by centralization, especially through exchanges such as Coinbase and Binance. So it only seems natural to explore DeFi in more depth and what it can offer and how it seeks to solve some of these problems.

What is DeFi?

Decentralized finance (DeFi) is essentially a decentralized financial system, which removes the ´middle man´ such as banks, brokers and centralized exchanges so users can invest and trade their cryptos anonymously and without a centralized authority. What this means is that anyone with access to the internet can access financial services without the need for a bank - this is great news for emerging economies or places where banking is alot more difficult and hard to access.

As DeFi is decentralized it also means that there is generally no need to provide personal information - a step back in the right direction of crypto being an anonymous space working outside of the centralized system. As I mentioned previously, centralized exchanges work through KYC and require alot of personal information before you can set up and trade. Although there is still fees involved in DeFi there is more flexibility as it is a peer to peer system, rather than being set by large financial institutions who are solely interested in profit.

So why is it important?

The main reason DeFi is important is that it gives power back to the community, rather than having that power in the hands of banks, insurance companies and centralized exchanges. As I mentioned above it is also anonymous - you can just create a wallet and start trading or investing your crypto with others in the community! There is alot more freedom in DeFi to move your assets around as you please - no dealing with banks and fees for all sorts of different things.

DeFi sets to revolutionize the way the world is financed and offer an alternative to large (and wealthy) companies.

What else am I going to cover?

I hope to go into more detail about the nuts and bolts of DeFi and how it actually works, then I will be looking at some of the different DeFi projects and hopefully testing them out and sharing my results and how they work!

If you want me to cover anything else on Defi then let me know!

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