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BTC $49329.10 (4.65%)
ETH $4187.57 (7.28%)
USDT $1.00 (0.02%)
BCH $464.53 (2.42%)
BSV $125.24 (13.7%)
LTC $159.22 (4.72%)
BNB $573.65 (7.16%)
ADA $1.37 (2.00%)
DOGE $0.17 (8.60%)

A Beginner’s Guide to Decentralized Finance (DeFi)

A Beginner’s Guide to Decentralized Finance (DeFi) DeFi News
  • What is Cryptocurrency?
  • What is DeFi (Decentralized Finance)?
  • How to Build and Manage a DeFi portfolio?
  • Advantages of DeFi

Money and its transactions have existed since prehistoric times, but cryptocurrency is another new way of paying for things, that it’s trying hard to make all other forms obsolete.

Many skeptics believe that cryptocurrencies are just a fad to be used for speculative investment rather than as actual currencies. However, they do not realize how powerful these tools actually are, especially when you consider recent advancements such as Bitcoin ATMs popping up across major American cities like San Francisco, New York City, Miami, etc.

Bitcoin ATMs were installed in Bratislava, Slovakia. In 2021, the United States had the greatest number of Bitcoin ATMs. Canada, the United Kingdom, and Austria followed. Among others around the world, leading financial institutions’ interest is increasing daily.

Let’s Understand What Cryptocurrency Is?

The cryptocurrency was created in 2009 by an unknown individual or group of individuals known as Satoshi Nakamoto. However, Nakamoto vanished from the project soon after. But the industry has blossomed daily.

Cryptocurrency is a virtual or digital asset based on blockchain technology. Blockchain is a technology that can be used to record transactions and share them across a network. The security aspect of this technology is a part of its allure. Moreover, it may be used to acquire products and services. Also, you can send cryptocurrencies to your friends and family. It can be bought and sold through exchanges and stored in “wallets”.

The most popular versions of cryptocurrency are Bitcoin and Ethereum (ETH), Litecoin (LTC), Cardano (ADA), Polkadot (DOT), Stellar (XLM), Tether (USDT). But there are over 4,000 other cryptocurrencies in circulation, according to CoinLore.

What is DeFi (Decentralized Finance)?

The cryptocurrency revolution has been one of the most disruptive and revolutionary technology movements in recent history. It has given rise to new industries, such as cryptocurrency investment and decentralized exchanges (DEXs). One emerging sector that is gaining traction in the blockchain space is Decentralized Finance (DeFi). Through DeFi, we can create a financial system that enables anyone with an internet connection to invest in projects.

DeFi offers lower fees compared to traditional banks. Many people have even taken out and paid off millions of dollars in loans without the need for identification.

In addition, DeFi works without the need for traditional, centralized intermediaries. It can be transferred through transactions between two parties without any mediators (banks) involved, making it difficult for governments or other third parties to track or regulate. This allows cryptocurrency users to remain anonymous when transferring funds from one party to another.

How to Build and Manage a DeFi portfolio?

Nowadays, it is not enough to simply buy and store cryptocurrency in the hope of making a profit. The need for a DeFi portfolio is getting bigger and more important than ever. Building and managing one or multiple DeFi portfolio(s) from one place is possible with the egg.fi platform.

It makes it easy to track your holdings, transactions, and overall performance. You can build as many portfolios as you want without having to worry about security or time spent on managing them. You’ll also find blog posts helpful if you want more information on how DeFi works and what projects are out there for your investment.

Egg.fi offers a stake as well. Staking is an easy way for investors to make a profit just by holding their tokens/coins. The longer you keep your EGG, the more your profit increases.

Advantages of DeFi

Unlike the traditional global financial system, DeFi has many advantages:

  • Security: The first step in a successful blockchain implementation is the creation of a new architecture that minimizes single points of failure and relies on intermediaries less. This is ideal for monetary transactions (as finance platforms do), since the blockchain will ensure that no third-party intermediaries may — despite intentions — mismanage, misuse, or tamper with users’ money in any way. It promotes confidence in the platforms
  • Transparency: Blockchain technology standardizes common operations and creates a single common source for all network participants. Transactions on any blockchain platform are permanently recorded and may be viewed and audited if needed.
  • Programmability: Blockchain technology allows for the reliable automation of business processes through the development and execution of smart contracts.
  • Non-custodial: As a result of this, third-party custodians become obsolete, as these business processes will no longer require their assistance. This can save money.
  • Democratization: It is available to everyone, regardless of location and jurisdiction. Users only need the ability to connect to the Internet. In the context of DeFi, blockchain technology will provide a chance for people to participate in the financial system without having to establish a conventional bank account.

Conclusion

Are you ready for the future shift? We are on the verge of a new financial system that is more liberalized and decentralized than ever before. The key concern is how to best manage its development while maintaining checks and balances that minimize risks and maximize potential benefits as widely as possible.

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Roland Guirdonan can be found writing, developing, and designing all sorts of content. Aside from his fascination with content creation, he is also passionate about blockchain and cryptocurrency developments.