The difference between centralized and decentralized finance
Having examined the process of how decentralized finance works, we revealed that it differs completely from the common financial system with regulatory institutions etc.
If you are not aware what decentralized finance means, check our previous post. Today we are going to compare a centralized financial system to a decentralized one and find out what makes DeFi dapps different from their common counterparts.
· No regulatory institution. The financial system of centralized finance is regulated by institutions and full of third parties. For instance, when you buy something with a credit card, the charge is sent to the acquiring bank. The last transfers card information to the credit card network. Decentralized finance eliminates any regulatory institutions allowing nobody, except the owner of money, to access financial services.
· Flexibility. Decentralized finance platforms are global. Most DeFi apps are technically accessible to everyone with an internet connection. Unlike a centralized financial system, DeFi one does not have any local office and makes users independent from any institutional regulations, all rules are written in a code.
· Costs and speed. DeFi platforms are much cheaper as they get rid of centralized regulations. It means that you do not have to pay any extra fees to banks. Moreover, DeFi saves your time. For example, it can take days and even weeks for common financial intuition to approve your loan. Decentralized apps will deal with it in a minute.
Hope you enjoyed reading our article!
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