nance) Processing financial transactions on Ethereum or similar blockchain network. Also called the "decentralized Web" and "Web3," DeFi allows users to buy, sell, trade, lend and borrow financial assets without a middleman such as a bank or brokerage. See DeFi as a service
Decentralized Means a Lot More in DeFi
Decentralized processing has been around forever. It always meant accounting of some type took place in different locations, whether using pen and ink, punch cards or computers. However, decentralized has an entirely new meaning with regard to crypto.
The decentralized in DeFi means that a number of computers around the globe are performing the same function in order to validate blockchain transactions, and a majority of these nodes must agree on every new block (see 51% consensus
). The difficulty is that any number of nodes can be coming online or going offline at any moment, and the program logic in blockchain protocols is much more complex than traditional decentralized processing both past and present.
A Revolution or Flash in the Pan?
DeFi proponents claim this is the beginning of a revolution that enables people from all walks of life to participate in financial transactions that were otherwise unavailable to them. In Dr. Martin Weiss' series of "Uncensored Crypto" videos, he says "DeFi will reverse the trend towards centralization of power in politics and business and in every aspect of our life." To many, DeFi means financial freedom.
Opponents of decentralized finance believe Bitcoin, Ethereum and all other blockchain-based assets are merely a fad that will fade into oblivion in time. Stay tuned! See Bitcoin vs. Ethereum
, DeFi lending
, DeFi wallet
, DeFi 2.0
, decentralized exchange
and crypto glossary
A DeFi Overview
These are the differences between centralized and decentralized finance. First on the list, "Open to anyone" is a major driver of crypto.
A Fact of Life
For decades, banks have charged exorbitant interest rates on credit card debt, thus creating a strong incentive for people to find new ways of dealing with their finances.
All About DeFi
An overview of the history and ramifications of decentralized finance, "The Wall Street Era Is Over" was written by the staff at DeFiYield.app, an organization that provides a variety of crypto services.