DeFi is a blockchain-based Decentralized Finance facility. There is no bank, third party, or broker involved in this. This allows you to transfer funds through DeFi in a matter of minutes. The best part is that the transaction fee is very low in comparison to banks. These fees, however, vary depending on the blockchain network.
DeFi does not require a KYC process like banks. Only a crypto wallet is required for this. You can use Defi through this channel.
When we do a transaction with the bank, the bank charges us a transaction fee and also tells us where and how to spend our money. All of these decisions are made by the bank. In Defi, we have complete control over the money, and the record of the entire transaction is stored in the blockchain, where anyone can see it.
Nowadays, the Ethereum network is used by the majority of DeFi applications (dApps). People use the blockchain network to conduct transactions in the Decentralized Finance transaction process. DeFi speeds up the transaction process by eliminating third parties and all brokers in the middle.
DeFi, like all cryptocurrencies, operates on top of blockchain technology, which is a decentralized system. This is not under the control of any single bank or institution. Blockchain technology is used to complete all financial transactions.
There is no middleman in this transaction. Banks serve as the middleman when we withdraw funds from a bank. DeFi stores a record of all transactions in blockchain, which anyone can access.
Financial transactions are conducted using Peer-to-peer (P2P) technology, in which no third party is involved between two parties and both parties can easily exchange cryptocurrency.
• You do not need to share any personal information with DeFi, such as your email address, phone number, address, or name. It is concerned with its users’ security and privacy.
• DeFi does not require you to open an account like a bank. It should only have a crypto wallet so that you can conduct transactions.
• The public blockchain stores a record of all DeFi transactions that can be viewed by anyone. This is done in a transparent manner.
• It can be used to trade and invest in Decentralized Exchanges, as well as staking tokens.
• However, blockchain technology is considered very secure, making it a very difficult task to hack; however, if someone does it, you will be held responsible for the damage caused by it. There is no way to compensate for this.
• Because it operates on a decentralized system with no rules and regulations, it must accept responsibility for your money.
• More fees must be paid in Ethereum Blockchain transactions, making trading extremely expensive.
• All DeFi applications include a private key, which must be kept safe because if it is lost, it is impossible to recover it, and all of the coins in your crypto wallet are also lost. goes.
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Disclaimer: I am not a monetary consultant, so conduct your own research and investigation before managing your money anywhere. The above article is the result of my own foray into instructional material. Although every effort is taken to ensure that all data is correct and up to date, mistakes and misprints do occur on sometimes.