Cryptocurrency news is all over the news and the topic of discussion of finance experts. Although it is hard to generalise its value and potential since all types of crypto are still continuously growing investment options. One of its types and the most popular one is Bitcoin; it is the ‘original’ cryptocurrency that has attained public attention since 2008. Since then, Bitcoin has grown rapidly and has a digital store of value surpassing $1 trillion in market cap, which forced banks, financial experts as well as its critics to take Bitcoin seriously. To start your trading journey, visit bitcoin-loophole.io – a reliable trading platform suitable for beginners as well.
Decentralised Finance (DeFi) is one of the factors and is the biggest one out of all the others that makes cryptocurrency so popular. This is what makes crypto gain the attention it has right now. But what is decentralised finance? This article will walk you through the basics of crypto’s decentralised finance and why you should be aware of it.
DeFi attempts to change traditional finance through digitising, democratising, and transforming trends of the global market. Should a person who is not even the least bit interested in crypto should be aware and care about it? The answer to that question is a YES! The reason for this is that financial experts see its potential of changing the world of finance.
Think of the ways people handle and service their finances: you can get a loan or save money through a bank and buy, order or sell products through an online store. When you do this kind of transaction, you let a third party, either the bank or the online store handle your finances. These financial institutions control the finance gates and force you to trust them that they will handle your finances well. Further, you have to conform to their rules and rates, which it would be easy to trust them too if they do not have such limited financial transparency. So, if you use these financial institutions to handle your finances, you let them have total control over it.
The control system of banks is totally in the complete opposite direction of DeFi. DeFi gives you the right to handle your finances under a transparent and clear set of rules while the nodes (computer network) full-on operate wide in the open. All users have access to the blockchain (digital ledgers) that centralised banks do not allow their clients to have access to. The power to access the blockchain is what sets DeFi apart from banks.
DeFi should not be taken lightly; we can say that it is still in its early development period and is still progressing. We cannot ignore the fact that there are hundreds of protocols in operation with real asset value locked up. To be more specific, DeFi has reached a combined market cap of $148 billion. Two of the most known cryptocurrency Bitcoin (BTC) has a market cap of over $856 billion, and Ethereum (ETH) has a market cap of over $357 billion both use Defi. You may think that DeFi is just hyped up for the sake of cryptocurrency but weighing in the assets it has, DeFi is seriously not going away anytime soon.
DeFi is the backbone of trading cryptocurrency, so if you are someone who wants to part ways with traditional finance, to see transparent trading transactions, as well as to have control over your money and investments, investing in cryptocurrency is a great option for you.
Although DeFi still has a long way to go, particularly in improving its User Interface (UI) and its regulatory frameworks, it’s a global trend and a change welcomed and acknowledged even by financial experts, and it’s something that will stay and continue to change the world of finance. So if you’re still in doubt regarding crypto’s DeFi nature, you can research more about it; although you won’t know for sure, these two might just surprise you when in the next five years, they become something that we may all interact with every day. It would be best to do your own research to understand the volatility of the market.