The current world is highly competitive, and almost every day something completely new is invented, something that should change this world once and for all. The most important thing for each of you and me is to find these inventions, technologies, or anything else and try to dive into them as quickly as possible. And about one of these technologies, we’ll talk in this article. It’s called DeFi (Decentralized Finances) and is going to revolutionize the whole financial system!
What is DeFi?
DeFi is an abbreviation for "Decentralized Finances." But what does it mean? It’s simply our usual banks, exchanges, and other public institutions built on blockchain. Or in other words, it is a financial system independent of anything, fully decentralized, and ruled by the power of the community. With these advantages, DeFi is literally killing our current financial system.
It’s actually a new step in turning our whole world into a symbiosis with the new Web 3.0 world. Just imagine if everything that you’re currently using was built on blockchain, fully decentralized, and absolutely independent of any outside factors. Firstly, it means absolute freedom of speech. You can say whatever you want and no one will ever be able to ban you or something like that. Because of decentralization, the ability for users to decide for themselves what to do and what not to do becomes a reality. And as I said, DeFi is another step toward a “perfect world”. Now we’ll talk about the exact advantages over the usual financial system and why you have to dive deeper into it.
Why DeFi is Better Than The Usual Financial System?
First of all, as we talked about earlier, it’s decentralized. It’s already the most crucial advantage that can exist. Decentralized means it cannot be robbed; it does not have any departments in New York or something like that. Because of the blockchain, every user of this protocol is becoming a little owner.
It has a much higher level of security. It depends on which cryptocurrency you’re building your DeFi on. For instance, Bitcoin uses the SHA256 encryption algorithm, and it’s really hard to hack and steal someone’s wallet. In fact, there still haven’t been any situations when the wallet has been hacked and stolen. For current computers, it’s almost impossible and will be in the near future as well.
However, the majority of DeFi’s are based on Ethereum or Ethereum-based tokens. So they’re using slightly different technologies and slightly different encryption algorithms but have the same level of security and possibility.
It’s also better because it uses crypto-tokens instead of our usual dollars. You can keep your money in almost any cryptocurrency that you want, and use stable coins if you want to have a connection to a dollar.
The cool thing is that you can stake your tokens and get an APY (Annual percentage yield), which works the same way as in the usual banks. However, instead of depositing your money, you’re staking your crypto. And by the end of the year, you’ll have, for example. +12% in your crypto and probably this token will grow. Or will go down, it’s a risky game :)
DeFi is powered by the community. As we talked about earlier, if you have at least several of this DeFi’s tokens, you’re becoming a small owner and can decide and vote for some changes in this project. This principle was excellently implemented in Braintrust. If you don’t know what that is, you can check out one of my articles as well.
It’s a Very Hot Topic Right Now!
I think you understand that it’s a crucial skill to understand in which direction the current world is moving. In other words, what are the hot topics right now, and in which of them can you participate? We can take a look at the machine learning sphere. Right now, ML engineers are earning multiple six-figure salaries a year. That’s a lot, especially if we compare them with UI/UX designers or any other IT-related profession. This is because right now there is a boom in the AI field and almost every business and start-up wants to use AI in their work and make work much more efficient than it was ever before.
The same principle applies to Web 3.0 developers. We’ve taken a look at all the advantages of Web 3.0, blockchain, decentralization, and especially DeFi. All these technologies are helping to solve many different problems, such as automating, removing all government control, and giving power to users.
How to Dive Into it?
It’s not as hard as you might think. You can invest in some projects and use them throughout your life. You can even create your own DeFi in several clicks and everyone will be able to use it. You don’t need to fill out any papers or pay any taxes; everything is decentralized and there’s no one who would be able to stop you from doing what you want.
There are a lot of DeFis on the market right now. Uniswap (UNI), Compound (COMP), Aave (AAVE), and many, many others. You can google each one of them and be shocked by the number of them. They’re all publicly accessible and each one of you can participate in, use, and invest in some of them!
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