•5 years
What are the benefits of DeFi?
Hi. What are the benefits of these popular recently decentralized finance? Could someone clarify the topic for me? Thanks
Hi. What are the benefits of these popular recently decentralized finance? Could someone clarify the topic for me? Thanks
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For me, the biggest advantage of DeFi is the high degree of anonymity compared to the traditional banking system. A group of people who, like me, do not like the increasing surveillance penetrating, among others, into the financial system, is constantly growing. Under the guise of security or protection against the effects of risky decisions, we have more and more examples of regulations interfering with financial management by individuals. It is enough to mention the need to explain the origin of larger transfers to a bank account or to close without notice the accounts of persons or companies suspected of involvement in a crime.
DeFi offers much greater anonymity and thus attracts those who want to keep at least some of their wealth out of the reach of regulators. Unlike a bank account, the wallet itself is anonymous - at least until the funds are transferred to the exchange, which knows our data thanks to KYC verification. I don't think it's good for outsiders to decide if and how people are allowed to manage their money, and unfortunately in many countries regulators are trying to do this by constantly changing the law. Thanks to DeFi, the possibility of using financial services outside the banking system appeared for the first time.
Moreover, access to financial services in the world is very uneven. First world countries have no problem with this, but in Africa and in unstable and less developed countries, people live practically outside the financial system. It is hard to expect that they will decide to use a bank account many kilometers away from their place of residence (especially a paid account) or in a country that has failed its citizens many times in terms of security or the rule of law.
For such people, banking available through DeFi applications may be the only chance to store and multiply their funds, and thus reduce economic exclusion. Thanks to stablecoins, they do not risk losing money due to exchange rate fluctuations, and at the same time they protect their assets against inflation, e.g. through deposits offering higher interest rates than the vast majority of banks. For this reason, an increasing percentage of residents of poor countries are joining DeFi - it is the only viable alternative for them.
DeFi as a financial system is immune to state regulations because it has a global reach - the introduction of bans in one country does not preclude further action in others, and it is difficult to imagine a situation where all governments unanimously introduce regulations unfavorable to DeFi. Thus, the chance of the system being destroyed is minimal. No government will be able to block funds even on a single wallet because users have it under their control at all times. This is the opposite of the situation existing in the traditional banking system, where one decision is enough for the client to lose access to his account and the funds accumulated on it for days, months or even forever.
In addition, DeFi is built on a public blockchain using smart contracts (e.g. Ethereum), i.e. special computer programs created to ensure compliance with the rules by system participants. This ensures a high level of security for operations and encourages new participants to join.
In banks, we must rely on the belief that our funds are safe, procedures are followed, and in the event of problems, the money will be returned to us. At Defi, we do not lose control over them by entrusting them to intermediaries, because we manage the portfolio ourselves. We can send them to a different address, make purchases or sell them on decentralized exchanges.
The range of available products is growing and includes not only loans and deposits with interest rates more favorable than those offered by banks, but also includes more advanced financial instruments that allow you to multiply your savings or earn money on loans. Probably in the future there will be so many of them that they will become real competition for investment funds, Wall Street or bookmakers.
DeFi offers much greater anonymity and thus attracts those who want to keep at least some of their wealth out of the reach of regulators. Unlike a bank account, the wallet itself is anonymous - at least until the funds are transferred to the exchange, which knows our data thanks to KYC verification. I don't think it's good for outsiders to decide if and how people are allowed to manage their money, and unfortunately in many countries regulators are trying to do this by constantly changing the law. Thanks to DeFi, the possibility of using financial services outside the banking system appeared for the first time.
Moreover, access to financial services in the world is very uneven. First world countries have no problem with this, but in Africa and in unstable and less developed countries, people live practically outside the financial system. It is hard to expect that they will decide to use a bank account many kilometers away from their place of residence (especially a paid account) or in a country that has failed its citizens many times in terms of security or the rule of law.
For such people, banking available through DeFi applications may be the only chance to store and multiply their funds, and thus reduce economic exclusion. Thanks to stablecoins, they do not risk losing money due to exchange rate fluctuations, and at the same time they protect their assets against inflation, e.g. through deposits offering higher interest rates than the vast majority of banks. For this reason, an increasing percentage of residents of poor countries are joining DeFi - it is the only viable alternative for them.
DeFi as a financial system is immune to state regulations because it has a global reach - the introduction of bans in one country does not preclude further action in others, and it is difficult to imagine a situation where all governments unanimously introduce regulations unfavorable to DeFi. Thus, the chance of the system being destroyed is minimal. No government will be able to block funds even on a single wallet because users have it under their control at all times. This is the opposite of the situation existing in the traditional banking system, where one decision is enough for the client to lose access to his account and the funds accumulated on it for days, months or even forever.
In addition, DeFi is built on a public blockchain using smart contracts (e.g. Ethereum), i.e. special computer programs created to ensure compliance with the rules by system participants. This ensures a high level of security for operations and encourages new participants to join.
In banks, we must rely on the belief that our funds are safe, procedures are followed, and in the event of problems, the money will be returned to us. At Defi, we do not lose control over them by entrusting them to intermediaries, because we manage the portfolio ourselves. We can send them to a different address, make purchases or sell them on decentralized exchanges.
The range of available products is growing and includes not only loans and deposits with interest rates more favorable than those offered by banks, but also includes more advanced financial instruments that allow you to multiply your savings or earn money on loans. Probably in the future there will be so many of them that they will become real competition for investment funds, Wall Street or bookmakers.
For me, the biggest advantage of DeFi is the high degree of anonymity compared to the traditional banking system. A group of people who, like me, do not like the increasing surveillance penetrating, among others, into the financial system, is constantly growing. Under the guise of security or protection against the effects of risky decisions, we have more and more examples of regulations interfering with financial management by individuals. It is enough to mention the need to explain the origin of larger transfers to a bank account or to close without notice the accounts of persons or companies suspected of involvement in a crime.
DeFi offers much greater anonymity and thus attracts those who want to keep at least some of their wealth out of the reach of regulators. Unlike a bank account, the wallet itself is anonymous - at least until the funds are transferred to the exchange, which knows our data thanks to KYC verification. I don't think it's good for outsiders to decide if and how people are allowed to manage their money, and unfortunately in many countries regulators are trying to do this by constantly changing the law. Thanks to DeFi, the possibility of using financial services outside the banking system appeared for the first time.
Moreover, access to financial services in the world is very uneven. First world countries have no problem with this, but in Africa and in unstable and less developed countries, people live practically outside the financial system. It is hard to expect that they will decide to use a bank account many kilometers away from their place of residence (especially a paid account) or in a country that has failed its citizens many times in terms of security or the rule of law.
For such people, banking available through DeFi applications may be the only chance to store and multiply their funds, and thus reduce economic exclusion. Thanks to stablecoins, they do not risk losing money due to exchange rate fluctuations, and at the same time they protect their assets against inflation, e.g. through deposits offering higher interest rates than the vast majority of banks. For this reason, an increasing percentage of residents of poor countries are joining DeFi - it is the only viable alternative for them.
DeFi as a financial system is immune to state regulations because it has a global reach - the introduction of bans in one country does not preclude further action in others, and it is difficult to imagine a situation where all governments unanimously introduce regulations unfavorable to DeFi. Thus, the chance of the system being destroyed is minimal. No government will be able to block funds even on a single wallet because users have it under their control at all times. This is the opposite of the situation existing in the traditional banking system, where one decision is enough for the client to lose access to his account and the funds accumulated on it for days, months or even forever.
In addition, DeFi is built on a public blockchain using smart contracts (e.g. Ethereum), i.e. special computer programs created to ensure compliance with the rules by system participants. This ensures a high level of security for operations and encourages new participants to join.
In banks, we must rely on the belief that our funds are safe, procedures are followed, and in the event of problems, the money will be returned to us. At Defi, we do not lose control over them by entrusting them to intermediaries, because we manage the portfolio ourselves. We can send them to a different address, make purchases or sell them on decentralized exchanges.
The range of available products is growing and includes not only loans and deposits with interest rates more favorable than those offered by banks, but also includes more advanced financial instruments that allow you to multiply your savings or earn money on loans. Probably in the future there will be so many of them that they will become real competition for investment funds, Wall Street or bookmakers.
DeFi offers much greater anonymity and thus attracts those who want to keep at least some of their wealth out of the reach of regulators. Unlike a bank account, the wallet itself is anonymous - at least until the funds are transferred to the exchange, which knows our data thanks to KYC verification. I don't think it's good for outsiders to decide if and how people are allowed to manage their money, and unfortunately in many countries regulators are trying to do this by constantly changing the law. Thanks to DeFi, the possibility of using financial services outside the banking system appeared for the first time.
Moreover, access to financial services in the world is very uneven. First world countries have no problem with this, but in Africa and in unstable and less developed countries, people live practically outside the financial system. It is hard to expect that they will decide to use a bank account many kilometers away from their place of residence (especially a paid account) or in a country that has failed its citizens many times in terms of security or the rule of law.
For such people, banking available through DeFi applications may be the only chance to store and multiply their funds, and thus reduce economic exclusion. Thanks to stablecoins, they do not risk losing money due to exchange rate fluctuations, and at the same time they protect their assets against inflation, e.g. through deposits offering higher interest rates than the vast majority of banks. For this reason, an increasing percentage of residents of poor countries are joining DeFi - it is the only viable alternative for them.
DeFi as a financial system is immune to state regulations because it has a global reach - the introduction of bans in one country does not preclude further action in others, and it is difficult to imagine a situation where all governments unanimously introduce regulations unfavorable to DeFi. Thus, the chance of the system being destroyed is minimal. No government will be able to block funds even on a single wallet because users have it under their control at all times. This is the opposite of the situation existing in the traditional banking system, where one decision is enough for the client to lose access to his account and the funds accumulated on it for days, months or even forever.
In addition, DeFi is built on a public blockchain using smart contracts (e.g. Ethereum), i.e. special computer programs created to ensure compliance with the rules by system participants. This ensures a high level of security for operations and encourages new participants to join.
In banks, we must rely on the belief that our funds are safe, procedures are followed, and in the event of problems, the money will be returned to us. At Defi, we do not lose control over them by entrusting them to intermediaries, because we manage the portfolio ourselves. We can send them to a different address, make purchases or sell them on decentralized exchanges.
The range of available products is growing and includes not only loans and deposits with interest rates more favorable than those offered by banks, but also includes more advanced financial instruments that allow you to multiply your savings or earn money on loans. Probably in the future there will be so many of them that they will become real competition for investment funds, Wall Street or bookmakers.
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DeFi, or decentralized finance, brings many benefits to users. Here are a few of them: No intermediaries - in DeFi, there is no need to use intermediaries, which means lower fees and faster transactions. Flexibility - users can customize DeFi to their individual needs and preferences. Security - thanks to blockchain technology, transactions are secured against fraud and changes. No censorship - DeFi provides anonymity and privacy to users, eliminating the risk of censorship by central institutions. I hope the above information helped you better understand the benefits of DeFi. If you have any additional questions, feel free to ask!
DeFi, or decentralized finance, brings many benefits to users. Here are a few of them: No intermediaries - in DeFi, there is no need to use intermediaries, which means lower fees and faster transactions. Flexibility - users can customize DeFi to their individual needs and preferences. Security - thanks to blockchain technology, transactions are secured against fraud and changes. No censorship - DeFi provides anonymity and privacy to users, eliminating the risk of censorship by central institutions. I hope the above information helped you better understand the benefits of DeFi. If you have any additional questions, feel free to ask!
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