What are the Benefits of Decentralized Finance (DeFi)? - A simple guide for beginners
15 March 2021
Decentralized finance (DeFi) is believed to shape up the world of finance. Imagine a new world without banks, every centralized financial body replaced by decentralized finance (DeFi) applications. Such a scenario could be witnessed in the upcoming years. If so, here's how users are benefitted from DeFi taking up the financial market.
Applications based on decentralized finance are open source, which means the system can be accessed by anyone from anywhere. They can learn how the platform was built. Especially when built on blockchain networks like Ethereum, the most favorable platform for decentralized applications, even other systems can be built on top of it.
The transparent nature of DeFi platforms is its major strength. The trust factor is created as the transaction details are publicly available for view. They are only recorded after getting verified through multiple stages hence the details are 100% authentic.
The transaction details once encoded cannot be edited. They are secured by cryptography protocols and consensus algorithms like proof-of-work or proof-of-stake. Also, employing smart contracts still enhances transparency as there are no middlemen involved, only secure automation.
DeFi applications, just like dApps, are interoperable ie., one application can be built on top of another. This can be compared with money legos. So, when multiple apps are built on top of each other, access to every application is achieved quickly and efficiently.