Defining DeFi



This In- is now dedicated to exploring DeFi. To become DeFi experts, we must defi-ne it on our own.

DeFi is known as Decentralized Finance. Let's break it down to get a clear picture:

We have Decentralized.
We Have Finance.

Uhh...

Decentralized Finance



We Have Decentralized

Made up of three parts:
  • How many computers are in the system
  • The number of organizations or individuals that control the system
  • If the computers, organization, and users were to reduce by 50% -- would the system still be able to function?  
    If the above criteria is met in a multiple (distributed) manner away from single (centralized) methods, the system is decentralized.


We Have Finance

Defined  as the management of money. Activities include lending, borrowing, saving, investing, budgeting, forecasting, and many more.


Uhh...

DeFi

Every financial service made accessible to anyone with internet access. Loans, savings, trading, and insurance would require no governments or institutions to authorize participation.

Instead, the rules will be written in code (or smart contracts, which we'll discuss later on).


That's the core of DeFi and what it promises.

Here's a personal anectdote about my understanding of DeFi:

I have a pal living in Korea (@yeegun). If I wanted, I could use him to invest in Korean stocks for me.

While foreign trading is possible, it's difficult to get access to international investing accounts.

DeFi would allow me to trade Korean equities easily. Without going through the tireless process of opening an account or relying on my buddy. All I'd need is internet access and some crypto to invest.