One of the more common phrases that you hear these days is DeFi or Decentralized Finance. But what is DeFi? How does it compare to Centralized Finance? Where do each fit into our financial lives?


The world of finance has been undergoing major changes for years. Blockchain technology, which was first introduced in the early 2000s and is now one of today’s most popular technologies , offers an excellent solution to many problems that exist within this industry because it allows us access to decentralized finances where no single entity can control your funds or make decisions on your behalf without consent from you as the user/holder.

Blockchain applications

Centralized Finance

Cryptocurrencies were originally bought and sold on central exchanges. With the rise in popularity, many people started to buy cryptocurrencies directly from their own wallets instead of through these centralized groups or individuals who would hold onto them until they got back to sell at higher prices later down the line (if that was even possible).

In crypto they say, “Not your keys, not your crypto” – this is a nice way of saying that the exchange has the keys to your crypto, not you. If they get hacked or go out of business you may find that you have lost all of your cryptocurrency that was in your account.

This is where Decentralized Finance comes into play- this system allows for quicker transactions while still holding all keys necessary so there’s no risk involved when sending funds between two parties without any third party involvement!

Decentralized Finance

Decentralized finance allows users to own their crypto, send it anywhere and spend it in any way. Using DeFi is a popular way for the unbanked to get involved with cryptocurrencies through specific apps built on blockchain technology that provide financial services like loans or credit ratings without requiring documents such as proof of identity.

Decentralized finance is a financial system that does not require an exchange to function. All processes happen in automated fashion through blockchain applications designed for lending, borrowing and interest earning on cryptocurrencies without interference from any third party agencies or organizations such as banks.

Centralized finance requires the involvement of a third-party exchange, while decentralized finances rely on blockchain technology. With centralized exchanges you have to verify your identity and deal with high fees in order for them trade cryptocurrencies; however using crypto without these intermediaries is easy because all users need are keys!

The biggest difference between Centralized Finance versus Decentralized FinTech isn’t where it happens – that would be at either end (i) centralization or decentralization), but rather how involved each party gets into their respective transactions: whereas financial institutions might require an introduction from both sides before completing any transaction…in fact many already do by way of KYC/AML requirements.

Dude, Where’s My Crypto?

Centralized exchanges are more vulnerable to hacks because of the custodial factor. It has access to your crypto and not you in this case, so using decentralized finance is much safer for staking or creating new coins while trading on centralized apps would still allow users buy & sell with ease (though at higher costs). Since they’re risky like always; it’s smart idea if possible-to store all assets on Decentralized Apps instead!

Exchanges on centralized finance are mainly the only ways to buy into cryptocurrencies using fiat money, and they also ensure that customers are educated about each cryptocurrency. This further helps adoption in this new space because people can feel more confident with their investments if they know what risks come along for every investment opportunity.

Ledger Crypto Wallet

Decentralized finance is a hot topic these days. It’s not every day that we see an invention with such revolutionary potential coming out of the blockchain, and it could revolutionize how individuals around this world interact financially! One method for doing so would be through what’s called “decentralized apps” or dApps on Ethereum – both built using their own technology which requires transaction fees to make most transactions go smoothly (in some cases). The term “gas fee,” comes from gas being used as fuel within computer programs; while running smart contracts across entire networks like Bitcoin only needs 25-50 Gwei.

With the recent rise of DeFi and yield farming, cryptocurrency is getting very interesting. Using a platform like Cake to “yield farm” can allow investors with little or no knowledge about cryptocurrencies to reap huge profits from their investments by allowing another application (e.g., Tether) custody over your funds while still earning interest on them through staking at an increasing rate for example—even if it’s just one crypto that you choose!


The key to decentralized finance is coming up with a system that can be used by all members of the community. It’s important for everyone – from those who are earning money, to those investing in projects, and even those receiving loans-to understand how it works so they feel comfortable using this new way of financing solutions.

Have any thoughts on decentralizing financial systems? Let us know!

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