Watch Latest Shows & Videos on Our Official YouTube Channel – BLOCKBYTES

Facebook Twitter Youtube Instagram Tiktok Linkedin Spotify
Blockbytes
  • Home
  • Shows
    • Across The Chains
    • Beyond the Block
    • Featured By Blockbytes
    • The Workflow
    • Byte Sized Videos
    • Quickflip Polygon
    • Legacy Content
  • Articles
    • News
    • Getting Started
    • Project Overviews
    • DeFi
    • NFTs
    • Networks
      • Polygon
      • Iota + Shimmer
      • Fantom
      • Aurora
  • BlockBytes Weekly
  • Meet the Team
    • About Us
    • Contact
Reading: Core Series III: Decentralized Finance
Share

  • bitcoinBitcoin(BTC)$16,787.14
  • ethereumEthereum(ETH)$1,210.10
  • tetherTether(USDT)$1.00
  • usd-coinUSD Coin(USDC)$1.00
  • binancecoinBNB(BNB)$247.45
  • binance-usdBinance USD(BUSD)$1.00
  • rippleXRP(XRP)$0.344393
  • dogecoinDogecoin(DOGE)$0.073311
  • cardanoCardano(ADA)$0.250973
  • matic-networkPolygon(MATIC)$0.79

Aa
Blockbytes
  • Home
  • Shows
  • Articles
  • BlockBytes Weekly
  • Meet the Team
Search
  • Home
  • Shows
    • Across The Chains
    • Beyond the Block
    • Featured By Blockbytes
    • The Workflow
    • Byte Sized Videos
    • Quickflip Polygon
    • Legacy Content
  • Articles
    • News
    • Getting Started
    • Project Overviews
    • DeFi
    • NFTs
    • Networks
  • BlockBytes Weekly
  • Meet the Team
    • About Us
    • Contact
Have an existing account? Sign In
Follow US
Facebook Twitter Youtube Instagram Tiktok Linkedin Spotify
Blockbytes > Blog > Article > Getting Started > Core Series III: Decentralized Finance
Getting Started

Core Series III: Decentralized Finance

Contributor
Last updated: 2022/10/17 at 6:06 PM
Contributor Published June 15, 2022
Share

How does a decentralized finance model change things for the average consumer?

In decentralized finance, we rely on code, or more specifically, smart contracts, to play the role of the intermediary in our financial transactions. This helps to mitigate the problematic human element that comes with the money middlemen referenced in Traditional Finance. 

In the decentralized finance model, consumers are given direct access not only to their funds, thanks to self-custody, but also transparency on how those funds are being utilized. 

For users in traditional finance, money placed into a bank account is largely done so on faith with the belief that it will earn them a return. The discussion around how that return is achieved is shrouded in obfuscation and mystery – not least because any returns that are being made will want to be protected from dilution.

If a financial strategy is disclosed, it may return less as a result, as others crowd the action or trade in an attempt to get similar returns. 

In complete contrast, users in decentralized finance are accustomed to viewing what their assets are doing, live, at all times. They can do this either by reading the smart contracts themselves, checking transaction histories on the blockchain itself, or through intuitive user interfaces that synthesize complex data into a more user-friendly wrapper. 

Trust in people is replaced with trust in code. 

However, this level of transparency comes with an intrinsic problem; whilst everything is freely available in the form of code, some barriers to entry will be insurmountable for the average consumer – namely the lack of accompanying educational content. 

This problem is managed in traditional finance by treating individuals as if they do not have the capacity to understand what is happening with their assets and therefore they do not disclose any of the actions they take to their users. Decentralized finance does not have this luxury. 

Additionally, as there are no central authorities policing DeFi (by definition), mistakes, malicious code and bad actors are all real, pragmatic concerns. Users are expected to “DYOR” (do your own research); to be constantly aware and prudent in their decision making whilst using DeFi. This means a tremendous information burden is placed on the user, the price of freedom.

Fundamentally, traditional finance and decentralized finance can be contrasted in particular using the established dichotomy of security and freedom. Whilst not a perfect comparison tool, as traditional finance can be insecure, for example, it is a helpful lens through which to perceive the two.

You Might Also Like

What are Stablecoins?

What is Proof of Stake?

NEAR Ecosystem Overview September 2022

What is Ethereum?

TAGGED: Core Series

Sign Up For Daily Newsletter

Be keep up! Get the latest breaking news delivered straight to your inbox.

By signing up, you agree to our Terms of Use and acknowledge the data practices in our Privacy Policy. You may unsubscribe at any time.
Share this Article
Facebook Twitter Email Copy Link Print
Previous Article Trading With Toli: How to Use Moving Averages and Price Envelope Bands
Next Article Recording devices are EVERYWHERE!
- Subscribe Us-
Ad image
Popular News
Shimmer 2022
IOTA 2022 – Small Steps, Big Year
Harmony Bridge Hack
Crypto Hack Casefiles: Horizon Bridge
SBF Confessions
Notes from Sam Bankman-Fried’s Congressional Confessions
QiDao logo on blue background
QiDAO
Ronin Bridge
CRYPTO HACK CASEFILES: RONIN BRIDGE

Latest News

Shimmer 2022
FeaturedIota + Shimmer

IOTA 2022 – Small Steps, Big Year

January 18, 2023
Harmony Bridge Hack
Hacks/Exploits

Crypto Hack Casefiles: Horizon Bridge

January 12, 2023
SBF Confessions
Editor's PicksNews

Notes from Sam Bankman-Fried’s Congressional Confessions

January 12, 2023
QiDao logo on blue background
Project Overviews

QiDAO

January 11, 2023

Stay Connected

Twitter Youtube

Subscribe

Removed from reading list

Undo
Welcome Back!

Sign in to your account

Register Lost your password?