Key Points
- What is DeFi?
- How will effect our current banking system?
- How can you benefit from it?
DeFi — short for decentralized finance — is a new vision of banking and financial services that is based on peer-to-peer payments through blockchain technology. Via blockchain, DeFi allows “trust-less” banking, sidestepping traditional financial middlemen such as banks or brokers.
What’s in it for investors? DeFi promises to allow investors to “become the bank” by giving them opportunities to lend money peer-to-peer and earn higher yields than those available in traditional bank accounts. Investors can also send money quickly anywhere around the world, and they can access their funds via digital wallets without paying traditional banking fees.
Here’s how DeFi operates, how it can benefit individuals, how it challenges traditional banking and the risks it presents.