All you need to know about DeFi (10% to tron-fan-club)

Hello every one welcome to my blog today, this is my first post in this @TronFanClub community. I was introduced to this community by a friend as one of the best communities in this space. I have plenty of crypto related topics to share and this is just one of them. Today I'll be talking about Decentralized finance.

What is DeFi ?

Defi is an emerging financial technology which has been in existence since 2009. It is gradually replacing centralised finance because of its advantages that are as follows :

• It eliminates the control, financial institutions such as banks have on many financial products and financial services .

• It is open to everybody regardless of who they are and where they are .
• Transactions are very swift and simple
• It eliminates third parties in financial institutions

DeFi is a broad term for a variety of app and project in the public blockchain space driven towards altering the traditional finance world (Centralised finance). DeFi is built on blockchain technology strictly using smart contract .
Over the years there has been a controversial question. 'Is bitcoin is a Decentralized Finance?'and after my research I have gotten an answer to this controversial question .In as much as DeFi uses cryptocurrency as well as bitcoin ,bitcoin is not DeFi as much as it is a part of it .

Advantages of DeFi over bitcoin

We all know that bitcoin is the most prominent cryptocurrency currently and has made many people millionaires in dollars over the years . It has a few downsides that has limited its use for example:

• Financial services have slowly appeared for bitcoin mainly because of its lack of market stability and adoption.

• Mainstream institutions won't accept bitcoin because of its volatility
  All these put together has made bitcoin a poor asset to plan any investment accurately .
  Because of bitcoins limitations it has led to the emergence of DeFi which is still very young and consist of decentralised block chain network and peer to peer (p2p) rules. It allows lending and borrowing of financial tools
  DeFi allow people to borrow at specific interest rate against a collateral and it also enables customers to gain interest by lending out assets using ethereum blockchain e.g compound finance .
  Compound finance protocol makes liquidity for crypto currency possible through interest rate set by making use of computer algorithm.

What is centralised finance ?

A centralised finance system is a system in which your money is held by big financial institutions e.g banks . They use our monies to make plenty monies for them selves and give their customers little stipend In return as interest.
Historically, centralised financial has been the movers and shakers of the economy, people put so much trust in them and over the years this trust has been broken which made people to question the centralised finance system .

DeFi brought about loads of opportunities and a free and fair financial market without anybody feeling entitled to anything . It reduces transaction time and eliminates third parties ,they do so by making use of the emerging p2p, that use protocol connectivity, hardware and software advancement .
NOTE
While DeFi is taking charge from financial institution third parties ,it does not provide anonymity. Your transaction can be traceable by the government to protect financial interest .

How does DeFi work ?

It uses blockchain and dApps to handle transactions .
DApp allows you to enter your loan wants and the algorithm will match you with someone that meets your wants . You will have to agree with the lenders terms and conditions and you receive your loan .
You receive your loan immediately the consensus community approves it . The lender starts collecting payments from you at intervals on the dApp. It follows the same blockchain process then the money is sent to the lender.
Basically the aim of decebtralised finance is to get rid of all third parties that are involved in financial transactions

What is the future of DeFi?

Since the beginning of time DeFi is the first financial system for the world population that the population shapes the operation of the system. Everyone takes part in the DeFi governance without any restrictions. DeFi is definitely on its way to prosperity
DeFi is still in the early stages of evolution. It is unregulated for starters and is prone to attack by hackers and scammers .The borderless nature of DeFi transaction has given rise to series of questions .For example who is to be held responsible for investigating financial crimes across DeFi apps ,borders and protocols ,how are the regulations enforced .
Apparently many questions must be answered before DeFi becomes save to use .
Perhaps if DeFi succeeds it is more likely that banks and other financial institutions will find a way to get into the system or worse case scenario make money from the system .

Thank you for reading .I'll appreciate ya honest reviews in the comment section .