How life changing decentralized finance (Defi) work ?
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In today’s world decentralized finance is known term for most of the people. But very few know how decentralized finance works. Now technology has taken a big leap for next stage, and that is web 3.0 technology.
Rising of Web 3.0 and Decentralized system.
Web 3.0 technology is so advance that in near future no one will be able to manipulate anyone’s data or any company. Any organization won’t have that access to anyone’s data which is very valuable and vulnerable also. This technology is totally based on blockchain programming, build by C++, Python computer program.
Decentralized finance initiated data transparency and financial management support in financial market. In Web 2.0 technology era people used to do transactions through direct online banking, bank transfer etc. But in this decentralized process anyone can do transactions with transparency. In Japan near about 30% on transaction a done by Blockchain cryptocurrency. Decentralized finance can be called as De-Fi.
Principles of Decentralized Finance.
There are some basic principles of decentralized finance such as:
Security: decentralized finance system is strongly focus on security of the users. When it comes to transaction in monetary terms security issue arises naturally. In De-Fi system blockchain technology privatize security initiatives by using smart contracts cryptography mechanism governance policy to reduce hacking or miss interruption of data.
Ownership of money: In decentralized finance, ownership of money is prioritized very sensitively. because in this system no one can hide their information that who sended money to whom or who lended to whom it’s all crystal clear to them who are relevant to the transaction, added or logged in that block of data.
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Inter connectivity : Interconnectivity is also known as one of the vital principles of decentralized financial system there are many platforms in blockchain technology where anyone can do any kind of monetary transaction by using different apps or platform. For example right now if you are using Amex card and visa master card for your transaction purpose and it will be hard to make interconnectivity between both cards. But here in this field you can make interactivity between many platforms as much as you want. It’s just your money and your wish to move it from here to there.
Deduction of mediator: Satellite finance totally eradicated mediator in finance system. Before mediatory used to cut off a percentage as charge of their service for providing financial support through online banking. It was an extra pressure or burden for a person to pay someone extra where they haven’t received any service. At this decentralized finance just appears like an angel.
Flexibility in decentralized exchange: Decentralized final system keeps maximum flexibility for a user. There will be only two party who are involved in the transaction. It’s like a ecosystem for trust around all the users. If the second person want to send money to do transaction with third party, there will be another block of data will be created for that transaction chain.
Asset management and token creation: Managing asset of real life and creation of token on behalf of user for specific asset is another principle of the decentralized finance system. In this ecosystem anyone can convert their real world assets into blockchain assets by creating tokens. This tokens are also exchangeable or tradeable based on their price and valuation. A user gets a digital wallet by which he gets easy access to transact or exchange tokens with other users. That person also can convert the token into real life asset anytime anywhere he/she wants.
Creation of smart contracts: Smart contracts are known as pillar of the decentralized finance. this contracts make automation of very complex financial transactions. Smart contracts ensure predefined conditions without an intermediary and execute accordingly.
Decentralized finance already has changed a lot in our life. In global phase, decentralized finance is growing each day and developing new sectors. Very soon it will become world’s most strongest monetary market where transparency, asset management and token creation, flexibility, interconnectivity will make this system more valuable and strong.
In today’s world decentralized finance is known term for most of the people. But very few know how decentralized finance works.
In today’s world decentralized finance is known term for most of the people. But very few know how decentralized finance works.