The blockchain industry started twelve years ago with the release of Bitcoin. That was a shock, a huge slap for the traditional financial system. However, from another angle, it was a Big Bang of a Decentralized finance universe.
Right after an industry or a trend appears, a series of breakthroughs are on the way. As an example, we can take a look at the traditional financial system that has been developing for centuries. During hundreds of years, the fiat system regularly experienced tons of breakouts. Swift launch in the 20th century is one of those.
We are lucky to have a possibility to observe the Blockchain sphere development. Let’s ask ourselves a question: “What is the next huge step forward for the blockchain industry after Bitcoin release?”. As I have worked a lot with blockchain projects since 2017 and I can see clearly new trends in crypto, I guess the answer is on the tip of my tongue - DeFi.
DeFi means Decentralized Finance
Besides that definition, there are two more - distributed finance or open finance.
Before discussing what it is, we’d better start with what caused DeFi to appear and why it goes forward at a great pace. New markets set modern needs and requirements that cannot be fulfilled with traditional financial systems.
Traditional finance is opaque and often experiences crises. Many are convinced that by gaining transparency society will have an efficient tool for prediction and avoiding any crisis in the future.
The main purpose of DeFi is to eliminate intermediaries such as regulators that burden the system and make processes more complicated. Achieving that goal means the arrangement of the main tools from the traditional system - lending, payments, trading and others.
Speaking in other words, DeFi will help the crypto market to become more and more familiar to the end-customer that got used to traditional finance but without one huge disadvantage - intermediary regulations.
A reasonable question might cross your mind after reading all the said above - “Why do we need a mirror of traditional finance?”.
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