A DeFi tool or platform is a computer programme that provides a smart contract with which we can have access to a service or financial product. This contract is generated on a blockchain chain. iIn this way, we will not need the supervision, authorization or refusal by a central entity such as a company.
A bank account, document signature, notaries, etc. are not required.
Defi could be defined as true financial freedom.
What technologies are used for DEFI?
DEFI is inspired by blockchain, the technology behind the digital currency Bitcoin, which allows different organizations to keep a copy of their transaction history and provides it with its decentralized character. This is very important as centralized systems and human gatekeepers can limit the speed and complexity of transactions, thus giving users less direct control with their assets.
DEFI expands the use of blockchain from simple value transfers to more complex financial use cases.
Advantages of using DEFI
Its low failure rate is one of the main differences. This is possible since it is based on the blockchain system, which is highly secure.
Another advantage is that DEFIs significantly limit the participation of intermediaries, reducing their number and, consequently, lowering the costs associated with the provision and use of financial products. In addition, nowadays anyone has access to the Internet, which allows them to use the solutions offered by DEFI.
Decentralized financial applications are a more economical solution, they are successfully offered to people with low economic resources.
The user can easily track transactions and changes. The applications are «open source», meaning their source code is available to everyone. Decentralized finance offers transparency like the entire blockchain.
Thanks to DEFI apps you have full control over your finances.