With smart contracts and blockchain involved, decentralized finance has become an excellent alternative to the most common financial services. They have proved they are great at updating, improving, and globalizing finance.
Until recently, we’ve been living in a centralized world because institutions are in charge of the access to capital markets and the issuance of currency. For example, to access the traditional capital markets, one must go through a financial institution authorized to do so, like a bank. That same institution will be the one centralizing all the information and will have the power of the clients’ assets.
The entity through which we have accessed the capital market is also registered in a centralized registry that allows it to access it. In other words, the entire financial system in this process is centralized. Even when we purchase on any platform to buy and sell goods or articles, the information is centralized. The same happens every time we make a payment through any application or means of payment. In the traditional capital market, the entire financial system is centralized. All the information, payments, purchases, sales of goods or articles, are centralized in records of the control agencies.
They are nothing more than financial systems without the need for intermediaries. Decentralized finance is an excellent alternative to traditional financial services supported by smart contracts. That came with the intention of updating, improving, and globalizing classic financial services.
DeFi is a set of rules and protocols that, thanks to blockchain technology, decentralize the financial system as we knew it before. In this case, the information flows without needing an institution to give its approval. The users themselves are the ones who safeguard their assets.
It is no longer necessary to make payments through banks or companies that provide payment services. It is also not necessary to lend money or invest through entities that centralize these activities. DeFi technology is here to stay, creating greater freedom for users to use and safeguard their money. In addition, thanks to the different investment platforms, people can access this type of service more efficiently and in just one click.