HELLO FRIENDS

Greetings my respected friends in this remarkable community.

This is my participation post for the Steemit Crypto Academy Contest Season 4 Week 2 - Decentralized Finance contest hosted by @crypto-academy

25% Beneficiary @Null

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INTRODUCTION

DeFi is short for Debt-Free Future. It's a term that's been around in the crypto space, but it recently started to gain more attention in mainstream finance. DeFi describes a way of thinking that looks at the world through a lens not just of digital currencies and tokens, but also all kinds of assets (including fiat currencies and bonds) to create a new paradigm shift.

WHAT IS DECENTRALISED FINANCE (DeFi)?

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DeFi is a new way of financing, trading, and lending. It's also an ecosystem that allows anyone to become an investor in the space.

DeFi stands for Decentralized Finance. This means that rather than being controlled by a third party like banks or other financial institutions, your money is managed by you—and you can use it however you want!

DeFi is a decentralized financial system that connects traders, investors and borrowers directly. The platform allows anyone to trade in cryptocurrencies or fiat currencies.

IN SHORT: DeFi is about democratizing finance through blockchain technology

DeFi is an emerging trend where people are using blockchain technology to understand their financial habits and create strategies around them. The goal of DeFi is to improve our understanding of money, specifically how much debt we have relative to our assets and how easily it can be paid back. This could help us build more sustainable financial models moving forward — and ultimately lead us into a better future!

THE BENEFITS OF DeFi

Investors can get access to higher returns on their investments than they would if they were using traditional financial systems like banks or stocks.

Borrowers can borrow money from borrowers at much lower rates than traditional lenders offer because there is no intermediary involved (the borrower doesn't even need collateral).

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ADVANTAGES AND DISADVANTAGES of DeFi

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ADVANTAGES

• DeFi is a decentralized system. It does not rely on any central authority or third party for its operation, which makes it more secure than centralized systems. This also means that there’s no single point of failure, like with many other types of finance products such as stocks and bonds.

• DeFi is a peer-to-peer network rather than an organization or company behind it (like banks). So you don't need to trust anyone else—you'll be able to buy and sell crypto assets directly from each other without needing intermediaries who might charge fees for their services.

• DeFi provides trustless transactions between users because they don't involve any third parties except those needed for certain aspects such as exchange rates between currencies used in different countries where cryptocurrencies aren't legal tender yet (such as China).

This makes DeFi very efficient compared with traditional financial systems which require complex processes involving middlemen such as brokers who gain profits off commissions when transferring money between accounts owned by different parties without any guarantee about whether those transactions will succeed because they're dependent upon external factors beyond anyone's control!

DISADVANTAGES

SCALABILITY
This is the biggest problem with DeFi and the entire blockchain systems. The network is not evolving as much as the transaction ratios are improving, and this puts the system in a controversial position as, day by day, the dexterity is grieving from these effects.

UNCERTAINTY
Occurs primarily in those networks where it is always operating with the changes. There is constantly market scepticism for cryptocurrency, and several of its network systems are enduring serious changes.

LACK OF INSURANCE
The additional setback of a DeFi chain is that it does not provide a seamless protection protocol to the investors. This is a serious dilemma, and many find difficulties trusting the system for this lack of authority and commitment.

LOW INTEROPERABILITY
The DeFi still need to go through a ton of changes and updates. The chain that is used in many systems such as Bitcoin, Ethereum, or BSC is not compatible enough to aid all the applications, procedures, and protocols co coherently at the exact time and pull them all together as well.

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DECENTRALISED FINANCE (DeFi) VS CENTRALISED FINANCE (CeFi)

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Long before DeFi was established, there was Centralized Finance (also known as CeFi) was the criterion for exchanging cryptos. With the Centralized finance (CeFi) system, all crypto trade arrangements were handled via a central exchange.

The primary precept guiding centralized finance (CeFi) is that all crypto trading orders are routed through a central exchange under Centralized Finance. It means users don’t own any private key that provides them access to their wallets.

In CeFi, central banks retain the ability to produce fiat money, and with that inflation is often evaluated against the value of a regular tier of consumer products, also known as a consumer price index.

DeFi is a new way of doing finance. It uses distributed ledger technology to create a more efficient, transparent and cheaper way for people to borrow money from each other.

Centralised finance is slow and expensive because it involves a lot of middlemen that take their cut from every transaction.

With DeFi, you don’t need any banks or credit card companies because all transactions are peer-to-peer instead of being processed by big companies that charge exorbitant fees for processing them. You can send money directly from your bank account into someone else’s account without having to pay any charges!

In addition to being faster than traditional banking systems (up to 10x faster), DeFi also saves users money on interest payments due solely on the amount borrowed - no hidden fees like overdraft fees or penalty rates apply here either!

MY EXPERIENCE WITH DeFi

I have been making use of the Binance Trading platform for my peer-to-peer (P2P) transactions. So far, I have not had any unwanted experience and it is quite easy to trade Crypto using peer-to-peer.

What is P2P (Peer-to-Peer)?

This is a service platform where the parties involved are directly connected to a transaction without a third-party mediator. P2P allows a user to trade (buy and sell) cryptocurrencies directly with other users.

Below is a simple way to use Binance for peer-to-peer buying and selling of crypto.

Step 1 : Login to the Binance app, if you already have an account, if not, then Signup one.

Step 2 : Click on trades located at the bottom centre.

Step 3 : Click on P2P for peer-to-peer transaction

Step 4 : It is on BUY (Green) and USDT by default, you can toggle the area highlighted with Pink to select your preferred Crypto. Then, click on Filter (highlighted Red)

Step 5 : Input the amount in fiat currency (green) of your desired purchase and means of payment and click on confirm (Red)

Step 6 : From the Filtered sellers, Click on the trader you wish to do business with

Step 7 : Enter the amount you wish to purchase which you have used to filter out those selling in that range, Then Click on Buy with 0 fees

Then click on making payments. Once you've made the payment and the seller confirms the payment, you receive the purchased crypto is equivalent to the amount paid in your wallet.

FUTURE OF DeFi

There's no disagreement that the inception of DeFi is propelling the financial industry into breaking new grounds and territories. DeFi is on an upward trajectory certain to shape the future of finance globally.

DeFi has opened a closed-door model in which traditional banking and financial services operate. It renders mediators redundant and displaces them with smart contracts that reduce the cost of services to users. For that reason, I believe that there is a lot more to come from decentralised applications.

CONCLUSION

DeFi is a Blockchain-based financial technology that uses smart contracts. Defi is different from traditional centralised finance because it is trustless, encrypted and decentralized. Defi offers many advantages over traditional methods such as faster transactions with low fees, no middlemen required and reduced risks such as hacking or theft of funds by hackers.

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I wish to invite @kouba01, @patjewell and @ruthjoe, and any other persons who would like to participate too to CLICK HERE for more instructions.

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Thank you all for always making out time to go through my work, and I only hope you enjoyed it😉😁. I can never say thank you enough. You are my real MVPs.

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NOTE: Always have a smile on your face, as you are never fully dressed without one.