Steemit Crypto Academy Contest / S4W2 - Decentralized Finance by @steemdoctor1
Hello everybody.
Welcome to this post. I hope that all of you will be good and happy and enjoying your precious health with the grace and blessings of Almighty Allah. Today, I am here to participate in the SteemitCryptoAcademy and the topic of discussion for today is **Decentralized Finance (DeFi). So, let's start the discussion without any waste of time.
Explain in your own words the Defi world Why is it important? Let's talk about it.
DeFi stands for Decentralized Finance. This word is actually a combination of two words 'Decentralized' means without any center and the word 'Finance' is a common term that is related to the economy. So, the whole word, Defi refers to a financial system that has no nay central controlling unit or authority. In simple words, the decentralized finance system is a system to deal with financial activities without any upper authority or a specific manager.
Conventionally, we are using the traditional finance system which is actually a centralized system. In that system, there are particular and specific individuals or authorities that control the whole system. If we talk about the traditional finance system of our country, it is mainly comprised of banks. These banks are actually the centralized financial resources that control the whole flow of money within the country. The main bank is the 'Central Bank of Pakistan' which is controlled by a whole team.
But the decentralized finance system is totally different from the traditional finance system as there is no central authority of governance that can control the flow and transactions of money and funds. The decentralized finance system is actually based on the public ledger that controls and verifies the transactions which take place in the chain. This public ledger is actually known as the 'Blockchain'.
As I have already explained that we were using the centralized finance system in the past. This centralized financial system has created various problems for the public, as well as, the authorities that are controlling the financial activities. To improve the finance system, the decentralized finance system was introduced with very unique and beneficial modifications.
In past, people used to hold their money in banks that are actually centralized in nature. For this purpose, they have to go to the bank, go through the complex and time-consuming verification procedure, and also still think themselves unsafe as they are giving their funds to the banks. The governance system and team of the bank could be able to make changes to the data and information related to that transaction.
But these things are improved in a very great way. Now, with the involvement of decentralization, the public is very satisfied to hold their funds in their own hands as they just have to put their asset and secure them with the public keys. In this way, the security of the funds is also improved and also, and the users are also satisfied with the decentralized financial system to keep their assets in their own control.
There are a lot of important things and innovations that the decentralized financial system has bought to the financial field. Some of them are transparency, data storage with great security, eradication of the involvement of central authorities, time-saving mechanisms, and scalability that can help users to make very efficient and valuable transactions in no time.
Defi Vs Centralized Finance. Advantages and disadvantages, let's talk about them.
Decentralized Finance system and the Centralized system are both financial systems that are currently adopted by the whole world on the basis of their merits and de-merits. There are some advantages, as well as, some disadvantages of both classes. These are discussed below one by one.
The advantages of the centralized finance are discussed below in the form of some points.
In centralized finance, the funds are under the control of the governance and central authorities so there is the proper check and balance of these funds daily.
The services that are offered by the Centralized Finance system are users friendly and easy for users to use these services for their benefits.
The centralized finance are controlled by a particular team and the contact of these individuals are available for the users so they can approach them at the time of any query.
There is proper verification of the identity of investors and users so there are very less chances for the abusive acts in the centralized finance.
The assets that are offered by the Centralized Finance system are much more stable than those that are offered by the Decentralized Finance system. So, this can help users to avoid high losses.
There is also a huge list of the disadvantages off the centralized finance system. Some of them are discussed below in the form of points.
In the centralised finance system, the funds of the users are under the control of the governance and the central authorities.
The users of centralised finance system have to trust on the central authority and the teams of these systems if they have to deposit their funds in banks.
The security system of the centralised finance is also know as much strong as that of the decentralized financial systems.
Less transparency of the transactions is also another disadvantage of the centralised finance as the normal person or not able to look after the transaction details of others.
There are much more complexities for the users if they have to make world wide transactions. And this is a great disadvantage as users have to waste much of their time in this way.
The operating systems of the centralised finance are not so much effective as the operating systems of the decentralized finance.
Whenever, the users have to make the transactions through the centralised finance, then they have to go through the complex system of KYC verification and thus lot of time is required for this purpose.
There is a very large collection of the advantages of the decentralized finance over the centralized one. Some important ones of them are discussed below.
There is no involvement of the central authorities and governance teams while making transactions so the users are free to enjoy the transactions of their funds according to their will.
The assets of the users are in their own hand so they are much more satisfied and relaxed regarding the security of their funds.
The security mechanisms and systems of the decentralized finance are much more strong and complex as compared to the centralized finance. So, this is also another advantage.
All of the transactions that are carried on the decentralized finance are stored and recorded permanently in the blockchain that can be accessible for everyone at any time of need.
Transparency is a very advantage of the decentralized finance as the users can verify and explore the transactions history of the other users in order to avoid any misuse.
Users can make world wide and cross border transactions of money within a few clicks and this is a great advantage of the decentralised finance.
The decentralized financial system also plays a very important role in the conservation of time of the users have they can make transaction anywhere and anytime without any limitations.
There are very low chances for the hackers to hack the friendship data that is present in the decentralized sites as the data is distributed among various nodes from various geographical areas.
As we all know that nothing is perfect in this universe, so the same is the case with the decentralized finance system. Some disadvantages of this system are as follows.
The decentralised nature of this system make it more susptible of the illegal activities like the money laundering, cyber criming, illegal money transfer and many more.
There is no any Central team to control the system so the users have to be very careful while making the transactions. If someone make wrong transaction then he may loss is money forever.
The mining hardwares of various cryptocurrency cause some harmful effects on the environment. So, this is another disadvantage related to the decentralized finance.
The cryptocurrency assets are very much volatile and due to this thing most of the users have to face huge losses due to the harmful fluctuations of the market of cryptos.
Many of the governments if various states and countries are still not accepting the decentralized finance system and thus users have to face difficulties while adopting this in those areas.
Have you used decentralized Exchange? Tell your experience and explain a Decentralized Exchange. Show screenshots.
I have used many Centralized and Decentralized crypto exchanges in the last two or three years and many of these exchanges are of great importance for me as they help me to improve my trading experiences and allow me going smooth into the crypto space. I have used various decentralized exchanges like PanCakeSwap, SushiSwap, UniSwap, Sun.io, and many more. But my experience was very good with the 1inch DEX.
1inch decentralized exchange is an exchange platform that is actually a product of the 1inch ecosystem. There are many important and unique features of this DEX. It actually allow users to exchange, swap and but various crypto assets and tokens with the cheapest prices as compared to different decentralized and centralized exchanges. Some important features of this DEX are as follow.
 |  |
|---|
 |  |
|---|
The most important features that are available on this decentralized exchange are the Swap, Limit and P2P options. From the Swap options, users can swap various crypto tokens with each other with low transactions costs ars compared to many of the other swap exchange platforms. Also, the prices of these swaps are adjusted very low as they are done after comparing the prices at various platforms.
From the Limit feature, the users can make the effectient and fast swaps but adjusting their own limits according to their understanding. These swaps would be done when the price will reach the fixed prices. While, with the help of the P2P option, the users can exchange their crypto assets with the fiat money assets like dollars, euros and many more.
 |  |
|---|
 |  |
|---|
You can connect various crypto wallets with the 1inch DEX. The complete procedure of connecting any wallet with the 1inch DEX are shown in the above screenshots. First of all, you have to tap on the Connect a Wallet option and then you have to select the operating chain. It is very impressive with think that the 1inch swap offers a lot of chain options.
After the selection of the desired chain, you have to select the wallet that you are going to connect with this exchange. Then you have to confirm the linkage between the wallet and the exchange and your wallet will be successfully connected with the 1inch exchange. So, these are some important features of the 1inch DEX.
My overall experience with this decentralized exchange is very good. I have many times used this decentralized exchange to carry out my various trades and swaps. The most important thing that I liked about this decentralized exchange is that it provides very suitable prices while comparing the real time prices of different tokens from various exchange and swaps.
There are also some drawbacks that could be improved in this platform. First of all, I would like to see more user friendly and simple options so that the new user scan easily access all the services with no difficulty. Also, there could be more reduction in the fees of the platform to make it more appropriate place for swapping and exchanging.
Give us your opinion about the future of Defi.
I am a strong believer of the success decentralized finance system. No doubt, the future of the decentralized financial system is very bright due to its number of advantages and various impressive and unique innovations that it bought to the world financial system. These factors make me believe the success of the decentralized system in the near future.
It is a very important thing that more and more countries are adopting the cryptos as the payment methods and adopting the decentralized finance system due to its high security, scalability, transparency, and many other factors that make it very beneficial for the whole Finance field.
Conclusions
Centralised finance system is actually such a financial system in which the funds and transactions are not under the control of any Central authority or the governance teams. Instead, the funds and transactions are under the control of the users by their own.
The decentralised finance have a number of advantages like very high scalability, high transparency, great and effective transaction speeds, time conserving transactions and many more. The future of the decentralised finance is very bright due to these advantages in the financial market.
I would like to invite my friends @alihussain07, @numanfarooq7677, @chant, @huzaifanaveed1 to take part in this amazing contest.
Writer: @steemdoctor1
Your article has been supported with a 50% upvote by @fredquantum from Team 2 of the community curator program. We encourage you to keep producing quality content on Steem to enjoy more support from us and a likely spot in our weekly top 5.
Thank you boss.
yeah, another excellent piece of work from your side in which you explained the Defi. definitely decentralized always gives benefits to its user by having no central authority, having low tax and a man himself is the owner of his currency. but the Volatility issue is still producing problems for the people. best of luck for the context.
Thank you very much brother for your precious comment here.
A very fantastic post with many useful tips about the centralized and decentralized finance and you also describe the advantages and disadvantages also in a very beautiful way. So please keep it up am waiting for your next posts.
Thanks a lot Numan bhai, I hope you will surely take part in this contest.
The introduction of decentralized finance brought a great solution to the problem faced through centralized finance, with DeFi one has total control of her assets, you can transact without the involvement of other parties which is not possible in CeFi, and one doesn't have to go through the stress of staying on queue for some time waiting for approval like in CeFi. You have given a clear explanation about the topics, thank you for sharing.
Thanks a lot for your precious comment here.
Your post was upvoted and reshared on @crypto.defrag
DeFi and CeFi are 2 different things. Where DeFi is an interaction between sellers and buyers while CeFi is still controlled by other financial institutions. There are many benefits that we can get from DeFi, where in DeFi there is no maintenance process.
I also shared a post about decentralized finance, if you have time please see it and I am very happy.
Thanks a lot for your precious addition here. Thanks for inviting me to your post. I will surely visit it soon.
Thank you for the warm welcome and I am very happy to hear that you will visit.
Yes the credit goes to blockchain for its noneditable, nonmutable and public ledger system .
You have written a quality post . Good luck
JazakAllah brother.
Hello sir greetings.
Going through your post I pick up something from the importance of DeFi.
We have been used to the CeFi and TradFi system in the past but with DeFi, it's a new era which is transparent, trustless and permissionless. Hence eradicating the need for central authority.
Great review of DeFi and pls hope you find time to check my entry here
Thank you for your precious comment here. I will surely visit your post.
I'm grateful sir 🙏
Excelente trabajo amigo, los sistemas descentralizados tienen un buen futuro en las finanzas.
Thanks a lot friend.