If you are to take a look of google trends like Defi related topics you would notice that in crypto sector it has literally exploded and yes it has been climbing up in usage and popularity ever since .just as there are skeptics there are also many people who believe that decentralize finance will be the true future of the monetary system we have today both on a local and global scale.well here i will talk about my opinion how defi is different from all the traditional financial tools that are common now a days and also elaborate on the potential on future of the sector as well.
so as i mentioned the term defi is an abbreviation of decentralised finance we will break it down in a second but in general defi refers to a new type of financial operations that are considered to be much faster cheaper and more than that it is user friendly than those complicated one we are currently used to ,it simply means that there is no single authority behind the concept instead it belongs to the masses the community behind the concept is in charge of its development and all decisions are made via a democratic vote instead of single CEO director or even the secret illuminati family telling every one what to do.
Probably, you’ll think: Oh man, it’s so bad! But you know what? This is the whole beauty of crypto, and what makes it special! All these types of features are very essential to DeFi!
Now, think of it this way: One day you decided to take a loan, let's say, for your dream car! You get yourself to the bank, and start arranging the details with the manager. Everything seems to be going great, up until the point when the manager decides to check your credit score.Maybe you’re late on paying back a previous loan? Perhaps you’ve had some other financial issues that you might have solved, yet the credit score doesn’t show that?
Well, the manager would check your financial history - the purchases and transactions that you’ve made, any previous loans that you’ve taken out, your debts, and so on. If, say, your credit score is bad, as sad as it is, the manager will deny your loan, and that dream car will have to wait! On top of that, the whole entire process will take quite a while to go through - you’d have to wait in queues, dig up all sorts of documents, make a wide array of phone calls, and so on. This is tedious and tiring!
In decentralised finance, all of these processes can be done instantly, thanks to the earlier-mentioned chronological data storage quality So, the question remains - is DeFi really the future of finance, or is it just another idea that will get lost in the history books?