I have to admit: Decentralized Finance \u2013 or \u201cDefi\u201d \u2013 is one of the most fascinating aspects of the blockchain and cryptocurrencies. In fact, it\u2019s defi that got me really excited about crypto in the first place.<\/p>\n
So, let\u2019s get to it!<\/p>\n
At its heart, defi uses the blockchain to make complicated things happen while cutting out the middleman in the process. Here\u2019s what I mean...<\/p>\n
Right now, finance is run by a hub-and-spoke model. And that model hasn\u2019t changed much in a long, long time. In fact, it\u2019s pretty much the same as it was before sophisticated computers and large financial networks.<\/p>\n
And you can see why: The hub-and-spoke model organizes most financial transactions into large financial centers around the globe, such as New York and London. When financial transactions are made, activities are generated in one of these centers. Those institutions then determine the details of the transactions and make sure that they are carried out like all the parties intended.
\nReally, not very complicated. And for the most part, it\u2019s not a bad system. <\/p>\n
But if you dig a bit deeper, you can see that the flaws in the system are pretty glaring. All those financial transactions have to be approved by a central authority. And that central authority -- in order to make sure everything about the transaction is ok -- employs a ton of people, from clerks to bankers to lawyers. Plus, the central authority has to own and operate a lot of computer systems to make the process as efficient as possible. And then, they have to make sure all these people and equipment are properly supervised and secure.<\/p>\n
Wow! That\u2019s a lot of running around to make sure that my debit card transaction for groceries at Ingles is on the up-and-up.<\/p>\n
And that\u2019s just the beginning. When you get into the scope of more complex transactions \u2013 like buying a car or a piece of real estate<\/a> \u2013 the number of resources required to make it happen can be absolutely mind-boggling.<\/p>\n Plus, concentrating all that financial activity into basically a handful of global institutions also means that the system concentrates all its risk. And all we have to do is look at the parade of financial meltdowns we\u2019ve had in just the last 30 years to see how costly and dangerous that can become.<\/p>\n And finally \u2013 but certainly most importantly \u2013 a staggering 1.7 billion people are unbanked around the globe and don\u2019t even have access to this system. That\u2019s a tremendous number of people that can\u2019t do financial things that we take for granted every day, like buying goods, getting loans, getting paid, or planning our financial futures.<\/p>\n By using the blockchain, Defi solves many of these problems.<\/p>\n The blockchain uses a system of decentralized ledgers on a vast array of computers to transact business. When a transaction is made on the blockchain, it is recorded in every ledger on every computer on the network. Once the transaction is recorded, every computer on the network makes sure it\u2019s right. If they all do, the transaction is deemed correct and added to the blockchain.<\/p>\n I used a version of this exact strategy to win the 2019 U.S. Investing Championship and have been teaching it to my students for a decade.<\/p>\n Learn The Strategy<\/a><\/b>\n <\/div>\n<\/div>\n As you can see, making a financial transaction this way eliminates the need for a central authority to bless the transaction and say it\u2019s ok. The blockchain itself accomplishes this task. That eliminates the need for a central authority and its expensive resources.<\/p>\n A financial transaction on the blockchain also greatly reduces the risk inherent in the hub-and-spoke model. Transactions are spread across a vast array of independent computers. And since all those computers are verifying the transactions, it\u2019s virtually impossible to cheat.<\/p>\n And finally, decentralized finance opens up the financial world to the unbanked around the globe. A decent phone is now all that\u2019s needed. That gets a lot more people onto the financial playing field.<\/p>\n Ethereum (ETH)<\/a><\/strong> is the second-biggest cryptocurrency on the planet. And for good reason: If you want to do Defi, you pretty much have to do it with Ethereum. That makes Ethereum the king of the Defi hill.<\/p>\n So what makes Ethereum so special to Defi? Really, it\u2019s pretty simple: Unlike value-based cryptocurrency networks like Bitcoin (BTC)<\/a><\/strong>, Ethereum was designed from the get-go to handle complex transactions. Built into the code itself are computational capabilities that other cryptocurrencies simply don\u2019t possess. And that makes Ethereum perfect for Defi.<\/p>\n So what can you do with Defi cryptocurrencies like Ethereum and others? Plenty. Here\u2019s just a smattering of the \u201cdapps\u201d or Defi applications: <\/p>\nHow Defi Can Help<\/h2>\n
How I Generated a 738% ROI Using This Secret Strategy<\/a><\/h5>\n
Defi Works On Ethereum<\/h2>\n