#Burnsteem25 | Steemit Crypto Academy Contest / S4W2 - Decentralized Finance

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I greet you all according to your time my dear Steemit friends. Am glad to be sharing my views with you on this week's Crypto Academy task titled Contest Season 4 Week 2 - Decentralized Finance. As the world continues to evolve, we see a new approach to financial transactions using blockchain technology, which is referred to as DeFi. So without wasting time, let's check out what I got for you.

The word "DeFi" has become very popular on the lips of modern financial enthusiasts, as many regards it as the future of the financial market.
It is an abbreviation for Decentralized Finance, and it's referred to as a new way of utilizing/adopting blockchain technology to make transactions.

In simple terms, DeFi refers to the utilization of blockchain technology to decentralize the financial system of today's world. This implies that the major aim of DeFi is to improve the conventional/traditional method of a transaction by using blockchain technology in the making of payments, allocating of loans, and management of assets, rather than using our local banks and financial institutions.

With the continuous revolution of technology, more and more people have become very interested in cryptocurrency and its innovations. As we all have seen so far, one of the greatest features/aim of cryptocurrency is to attain complete Decentralization, which means cryptocurrency is highly affiliated with the DeFi world.

I see DeFi as a more advanced approach to dealing with the revolution of finances in our today's world. Although this innovation is still growing and improving, many people are beginning to implement and utilize it in their everyday financial operations.
The fundamental objective of DeFi is to enhance the lending, investing, and trading of assets without the intervention of a third party.

DeFi has so far improved the flexibility of the financial world by providing a more secure and transparent transaction of assets between two different parties. Below are some of the major importance of using DeFi.

• DeFi Enhances Better Transaction Transparency: DeFi has been designed to operate openly, So it uses blockchain technology to specifically allow everybody to see and knows the records and endpoints of every transaction.

• It Provides Higher Security: It's very true that transactions are safe and secured with DeFi than with some centralized systems, because DeFi operates with cryptographically secure smart contracts, while the centralized system uses centralized servers. What this implies is that transactions made on centralized systems are before attack and hacks than with DeFi.

• DeFi Provides Higher Liquidity: Given the fact that more people are adopting the use of decentralized exchanges, DeFi platforms tend to get higher liquidity than conventional exchanges. This allows traders to easily enter and exit different positions at a great pace.

• Lower Fee Rates: When compared to the centralized financial system, DeFi provides lesser transaction fee rates because the service of a third party won't be necessary, thereby saving a huge percentage yourself.

The financial sector today is divided into two distinct systems which include Decentralized and Centralized Finance. The DeFi sector has more advantages than the centralized system, as we need no third party for the execution of transactions. Let's talk about the differences between DeFi and Centralized Finance.

Differences Between Decentralized Finance And Centralized Finance

• Security is much more guaranteed here, as the use of blockchain and cryptographic protocols will help in securing transactions made on the platform

• Power is not controlled by a central authority here, which means there are no set up regulations guiding the performance of operations on the platform

• DeFi platforms allow for a P2P funding system whereby assets could be globally transferred between two different parties even without the intervention of a third party.

• The transaction fees here are low when compared to CeFi, as no third-party charge is required.

• There's more transparency in the DeFi system, as blockchain technology equally makes sure that documentation and confirmation of transactions are within an accessible public ledger.

• Since there is no centralized authority to guide the endpoints of transactions, funds that are mistakenly sent to the wrong address are more likely to be lost forever, with no possible means of restitution.

• The non-general global adoption of DeFi remains a big challenge today because many people are still terrified of the harsh opinions of the federal government regarding decentralized platforms today.

• Given the fact that transactions are carried out between unidentified users, criminal transactions could be perpetrated by anonymous individuals.

• Given the fact that there is no huge volatility in CeFi, users can confidently save their funds here and generate interest as profits from the platform.

• In CeFi, the people in authority would be held responsible for any form of loss or attack, as they make sure that they're no malicious activities taking place on the Platform. They carefully monitor and sanction every illegal activity on the platform.

• In the CeFi system, users' KYC is necessary as central authorities make sure that every user's identity is verified for easy contact between authorities and the customers.

• In the CeFi system, there is no or less transparency, because only people in authority are given the opportunity to access and verify transactions performed on the platform. In other words, funds can easily be manipulated here than in DeFi.

• Only the central authorities here make the rules and regulations which would then control the operations of the platform.

• CeFi systems tend to be less secure, especially when compared to DeFi because the security operations performed are done manually unlike DeFi which uses blockchain technology to secure its operations.

Yes, I have made many transactions on various decentralized exchanges, and I usually trade using their p2p section where I get to directly buy or sell my asset with other users. This trading method is decentralized because a third party is not necessary for the execution of the transaction.

For this lecture, I will be sharing the Binance P2P exchange which allows me to directly trade my asset with other users without the involvement of a third party. Trades can be made directly from my wallet, and I can exchange my crypto assets for fiat money. Below is a guide on how I do it.

• After logging into the Binance exchange, you would locate the P2P section by clicking wallet at the bottom right-hand side of the platform. After which I clicked on P2P.

• I could easily select any trader I wish to sell my asset to in this section. And then I would insert the amount I wish to sell and click the Sell button.

• And as you can see in the screenshot below, the buyer has made the payment and I confirmed/released the exact amount of coins traded.

The fact that in the DeFi system users are given full control over their operations, I think lots of people would embrace this system in the nearest future. As technology continues to evolve, we would get to see more people choosing decentralized platforms rather than centralized ones because of the transparency it provides.
In the future, we would see DeFi become even more secure and preferred because of the cheap transaction rate which would interest a lot of investors. The future is bright for DeFi I can confidently say that it is the prospective of the financial market.

As we have seen, DeFi is the latest and most preferred financial system today, because it uses blockchain technology to execute financial operations, making it more secure, transparent, and accessible for traders.
Am inviting @sanjamkapoor, @faran-nabeel, and @amryksr to check out this contest.

Note: All screenshots are taken by me on my Binance Exchange

Thanks for your time here, I really appreciate❤️..