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  In our world today, a whole lot of evolvement has happened in the finance systems, transactions are carried out easier than before, errors are less, fraud is reduced and many more, all of this is because technology has found its way into the financial sector.
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What is Blockchain Decentralized Finance?

Decentralised Finance explains the evolvement of the financial sector from being centralised, that is revolving around central banks and establishments owned by the government to technologies built on the Ethereum blockchain, it is also known as DeFi. Decentralized finance is based on a systematic way of functioning that runs on the Ethereum blockchain’s decentralized infrastructure. DeFi developers now have the ability to establish financial protocols and platforms that execute exactly as designed and are accessible to anybody with an Internet connection by utilizing smart contracts on Ethereum that are unalterable. This is unlike the traditional finance system which is centralised. Decentralised Finance (DeFi) today has brought a clear shift in the running pattern of the financial sector and this has come with huge merits and benefits, especially, in terms of risks, trust and opportunities.

Risks

Trust

Opportunities

Risks in the sense that, Decentralized finance (DeFi) brings in the benefits of taking risks, every risk taken comes with the possibility of making a loss but taking risks in the decentralized finance system is safer.
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Furthermore, here is where trust comes to play in Decentralised Finance (DeFi), fraud operations have massively been reduced as compared to the traditional centralised financed system, encryptions are put in place in the blockchain which has enabled this, it functions neutrally. The build-up of Decentralised Finance allows for the documentation of information only after its legitimacy is confirmed. As a result, DeFi applications enable the detection and prevention of potential financial fraud and deceptive business practices. Going forward, Decentralised Finance (DeFi) has brought in quite a number of opportunities for a whole lot of people as there is no need for special access, as long as one has a crypto wallet and a good Internet connection you’re good to go. You can go ahead to buy assets, lend out digital assets and also gain interest. In conclusion, asides from the benefits and advantages that Blockchain Decentralized Finance comes with, there are some downsides too, such as, Because of the Ethereum blockchain’s fluctuating transaction rates, active trading can become costly, your investment may experience considerable volatility (with some exceptions), and you must keep your own records for tax purposes. Regulations differ from one location to the next. Featured Image Source: Star wars
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This article was first published on 18th April 2022

chidiogo-akaelu

Chidiogo Shalom Akaelu holds a degree in English and Literary Studies, from the University of Nigeria. She is a freelance writer, editor and founder of Loana Press, a budding online publishing outlet.

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