Decentralized finance

Decentralized Finance (DeFi) is a new financial technology based on secure distributed registries similar to those used in cryptocurrencies. The system eliminates the control of banks and institutions over money, financial products, and financial services.

Here are some of the key benefits of DeFi for many consumers:

DeFi eliminates the fees that banks and other financial companies charge for using their services.
You keep your money in a secure digital wallet, not a bank.
You can transfer funds in seconds and minutes.
In centralized finance, your money is stored in banks, corporations whose main purpose is to make money. The financial system is full of third parties that facilitate the movement of money between parties, each charging a fee to use their services. For example, let’s say you buy a gallon of milk with a credit card. The payment comes from the merchant to the acquiring bank, which transmits the card data to the credit card network. The network requests the payment from your bank. Your bank approves the payment and sends confirmation to the network through the acquiring bank back to the merchant. Each entity in the chain gets paid for its services.

Decentralized finance eliminates intermediaries, allowing people, merchants and businesses to conduct financial transactions using new technology. This is accomplished through peer-to-peer financial networks that use security protocols, connectivity, software and hardware.

From anywhere you have an Internet connection, you can lend, trade and borrow using software that records and verifies financial activity in distributed financial databases. This database is accessible from multiple locations; it collects and aggregates data from all users and uses a consensus mechanism to verify it.

Decentralized finance uses this technology to eliminate centralized finance models, allowing anyone to use financial services anywhere in the world, no matter where they are.

DeFi applications give users more control over their money with personal wallets and merchant services designed for individuals.

Decentralized finance uses the blockchain technology that cryptocurrencies use. Blockchain is a distributed and secure database or registry. The goal of DeFi is to get rid of third parties that are involved in all financial transactions.