#Burnsteem25||Steemit Enagament Challenge S4W2||Decentralized Finance||by @mateenfatima
Hello Everyone
I hope that you will be good in health and enjoying life by the blessing of Almighty Allah welcome here in my post is my participation in the Crypto Academy Steemit engagement challenge season 4 week 2. The topic assigned for the completion of the contest is Decentralized finance which is a huge topic to discuss so let's start the discussion without any time wastage.
It is referred to by the name of the decentralized finance it is the finance system that is not controlled by any specific authority or Central power. It is a separate decentralized financial system. It controls the activities of finance without any specific authority control under which the system works. The traditional financial system is working as a centralized system controlled by the central banks such as by the issuance of currency notes or by controlling the dealings of the economy. It is maintained by blockchain Technology in which transactions and flow of money occur without any centralized governance or management. So the decentralized Finance named Defi the short form is different from the traditional financial system that we use publicly in our dealings.
The centralized financial system that we are using now generally operates on the banks, debit cards, credit cards, and ATMs on the other hand, the decentralized system is different from the rules and regulations of banks and their policies we can make transactions according to our roles and whenever we want to be based on the blockchain technology.
It is based on cryptography making transactions easier and at a low cost without being tracked by the centralized governance. On the other hand, the decentralized financial system supported high security and is also flexible in making transactions. It is a digital form of currency. Through the system, we will be able to make the transaction without the involvement of third-party and specific policies assigned by the central authority in the form of a centralized financial system.
All activities that can be performed by Centralized finance can also be done by the modern technical decentralized finance by different features such as buying and selling, lending and borrowing become easy by different applications of decentralized finance. This centralized finance system has great modifications with its features that support a secure and fast transaction.
The system Supports the transactions whenever we want while in the centralized system we have to wait for the banks such as for the working days we will be able to make transactions efficiently while in the holidays we encounter problems if we have to make transactions instantly we will not be able to do that, the decentralized financial system had eradicated this problem and give us access to the exchanging of currency that anytime when we want.
With the advancement in technology, the finance system has also been extended with new modifications and improvements that make the transactions easier and reliable and have reduced the fee for making transactions as there is no third party involved in making decisions and processing for verification to make transactions.
The sending, receiving, and lending or borrowing of money is much easier in the decentralized finance system because there are no large processes for verification and paperwork occurs for the sake of getting money. It means the decentralized finance system has made the transaction process, fast and easier. We can complete the process of transactions in less time which helps us to save the time we spend in the banks, almost the whole day sometimes. One of its benefits is that we do not need to stand in the queue at the banks and waste our time we can make fast, easy, and secure transactions just by some click with the help of the mobiles in our hands.
DEFI products can be used easily without any policies and on the other hand, we feel satisfied because we are performing our transactions with our hands without the involvement of a third party. This gave the satisfaction to us that we are transferring money by ourselves. The importance of decentralized finance can imagine as it is really helpful for the global economy it allows one to invest and got money from any country due to the fact of decentralization cross-border transaction is accessible and easy. People are very satisfied by having money in their own hands and utilizing it according to their own needs without any policy or waste of time just buy some clicks on their devices in their hands.
Both decentralized finance and centralized Finance have some advantages and disadvantages. Not everything can be perfect it also has some shortcomings too. So now let's talk about the advantages of centralized finance and decentralization as well as their disadvantages.
As I have discussed earlier decentralized finance is finance without any Central authority controlling it. It is based on the block and Technology and people can easily make their transactions. All it has many advantages but the demerits are also part so let's discuss both merits and demerits of decentralized finance.
The most important advantage of that is decentralized finance is that the security and privacy of users are insured as their funds are under their control.
The security system of decentralized Finance is also stronger and more complex than as compared to the centralized financial system.
High scalability is also another important advantage of decentralized finance. Users can make cheap and efficient transactions within no time.
Investors feel more satisfied with decentralized finance because they are controlling their transactions on their own using their private keys.
There is no problem for the users if they have to make cross-border transactions of huge funds.
The users do not have to abide by the complex and difficult rules and regulations of the government or any other authority.
The data of all the transactions and funds are not present at a particular center, it is divided into different nodes, thus there are very low chances of data hacking.
One of the most important disadvantages is the decentralization by itself. Some scammers can use decentralization for their illegal activities and money transfers for fake purposes.
The applications of decentralized finance are not too easy to understand by the new users.
Lack of information about any team or guiding company is also another demerit of the decentralized finance system.
In Defi, if we have made any wrong transactions then we are not to undo our transaction. So this is also a huge loss for the uses of decentralized finance.
On the other hand, a centralized financial system is a system under the control of Central authorities they make all the policies for the transactions and are fully involved in tracking records in exchanging our money. The centralized financial system we are using for centuries under the Governance of Central banks of the countries. It also has some advantages and disadvantages so let's discuss them.
Data management is easy in centralized finance as there is proper banking and recording system.
There is always a team to guide the users at the time of any query. So, users can find timely and effective solutions to their various problems.
KYC verification is also an advantage because the identity of the transactor and the receivers are properly monitored so there are very low chances of scamming and fraud.
The most important disadvantage of centralized finance is that the privacy of the users is not satisfied in the system because their data can be accessed by the central authority.
The users have to take permission from the governors or the central authority before making any transaction in the centralized finance system.
When we have to make a transaction through the bank, a lot of time is wasted in the verification system of the banks.
We have to face different problems and difficulties while making the transactions of money from one country to another country or state.
The lack of scalability is also another disadvantage of the centralized finance system as we have to waste much of our time while making any transaction through this system.
We have to trust in the governance of centralized Finance systems if we want to keep our money there. So this thing sometimes creates problems for many investors
Yes, I have used the decentralized exchanges some of them are Uniswap, 1-inch DEX, Pancakeswap, Sushi swap, etc the overall experience was very good because we can make transactions and connect to the wallets very easily. There are a lot of features in it also that help a lot.
Now the decentralized exchange about which I am going to talk is the Tronlink Ecosystem which is the official wallet of the Tron ecosystem. It is a 3.0 type of wallet and is very useful in case of exchanging different coins TRX, Usdt, etc. It is based on the decentralized application which is furthermore connected to different daps to add more features and innovations to the application. Some screenshots from my Tron link wallet are shown below.
I like to use Sunswap that is present in the Tronlink wallet, because of its easy transactions and different featured apps on the other hand this swapping is also very easy with the help of tronlinkwallet there are many swapping tools such as Sunswap etc with the low fee it can swap 1 coin to other such as you can see the screenshot of swapping from TRX to USDT. My wallet is connected to the same wallet as mine. I also like the security for making easy transactions. Here, you can see this screenshot of different DApps dad enhance the features of the wallet.
Here you can see different Dapps that add different features to the wallet. These apps are very easy to access and use. Hey, you can also see different options such as the generate wallet option and connect wallet options where you can exchange different coins and make easy transactions.
I have overall good experience with these decentralized exchanges. It is easy to use and in a very convenient way, we can send or receive the currencies. It is a very secure wallet because it is officially of the Tron ecosystem. There are also instant swapping options that make it easier to use and make the experience impressive. I mostly used the wallet to exchange my TRX for USDT. So it is concluded that I have overall a very good experience with this decentralized exchange in exchanging my currencies sending swapping and making transactions.
No doubt the future of a decentralized finance system will be very bright because of its impressive and useful features in making transactions. It provides a lot of features such as transparency, security scalability, etc, in our financial systems we always want to be very sensitive so the decentralized financial system will help because we can do our transactions with the new features very easily without any involvement of the third party.
The innovation of a decentralized system will also boost the economical system because of its reliability and a huge list of advantages in finance. As technology is developing people are also accepting innovations in different fields including the fence. We always want this system with high security and fast working as the day centralized provide us pure reliable and scalable transactions so definitely the future of Defi will be bright.
A decentralized financial system is a great modification in economic and economical growth with its modified features and importance. They are unable to make transactions easily and surely without any wastage of time and involvement of the third party. It satisfied the public with its P2P and blockchain technology by which we can lend or borrow and exchange cash on national and international levels according to our regulations we did not have to follow the policies that are established by the authorities in the case of a centralized financial system.
Regards
@mateenfatima
Wow, such a nice and well explain post you have done on the decentralised financial system. You have a great knowledge of the financial system and you have clearly distinguish the decentralized finance from the centralised one.
No doubt there are lot of advantages of the decentralised finance over the centralised finance. The first and the most important advantage is that the users do not have trust about the third parties in the decentralised financial system.
Thank you for taking time to participate in this contest and wishing you a very good luck for the contest.
Thanks for your valuable words.
Oh my goodness
You've taken your time to explain decentralized finance, its advantages etc
You're really learned, thanks
Thanks friend for your visit.
You're welcome
Así es amigo, no solo modifica el crecimiento económico; sino que lo está haciendo de forma alarmante.
Muy buena explicación, te felicito,
Saludos
Thanks a lot friend,for your valuable comment.
Amigo excelente trabajo, los sistemas descentralizados tienen un buen futuro en las finanzas.
Thanks for your visit.
You are right, both DeFi and CeFi are similar in terms of what they do but the removal of third parties, central authorities, and its transparency makes DeFi stand out, with DeFi there is no need to be afraid of central authority corruptible acts. You have done justice to the topic. I wish you good luck in the contest.
Thanks a lot for your valuable comment.
Decentralized finance are really one of the best because they have helped improve trust and reliance between users and the decentralized finance.
Thank you very much for sharing
wishing you success
Thanks a lot for your visit and precious words.