Anyone that has exposure to the cryptocurrency markets on a regular basis has heard of the earth-scorchingly fast rise in popularity for DeFi projects, otherwise known as decentralized finance. Some believe that this is a bubble bound to burst while others believe that cryptocurrency, by embracing these projects, is finally fulfilling its prophecy as a decentralized financial system for people around the world to use and benefit from. Either way, it’s undeniable the waves that have been made by DeFi projects and they are sure to play a key role in the developments to come in the cryptocurrency space.
What is DeFi?
If you are new to cryptocurrency or haven’t yet heard of the numerous DeFi projects out there, then you might be wondering what exactly DeFi is and why it is so special. DeFi is a common term that is used interchangeably with decentralized finance. Decentralized finance projects are projects that aim to put the financial power back into the hands of the people instead of forcing people around the world to use traditional financial systems that are often slanted against the user and present them with little or no privacy and security over their own assets.
When you use the decentralized finance system, there is no third party and you depend on no company to store your assets. You will be storing your assets on a blockchain network in which anyone can participate. Through that diversity and level disbursement of power, security and privacy can be found.
Is Bitcoin Enough?
You may be wondering why we need decentralized finance projects when we already have Bitcoin, which was meant to be a huge step forward for privacy in payments and the ability to use a trustless system to transact value. However, many know that while Bitcoin started a revolution in the way that we conceptualize money and our financial payment systems, it doesn’t go quite far enough to provide people with the utility they need to switch over their financial life to one that lives on the blockchain.
As a result, many projects have risen to not only provide users with the ability to transact coins and value on the blockchain, but to also invest their cryptocurrency, store it securely, and engage in any other financial behavior and functionality that they would otherwise have with the traditional financial system.
DeFi Projects
To capitalize on the need for a more decentralized way to run your financial life, dozens upon dozens of blockchain projects centered around finance have risen. The most popular examples include SALT, 0x, Kyber Network, AirSwap, and more. Each project aims at taking a traditional financial product such as trading, loans, investing and turning it into a feature that is able to live on the blockchain. With the power back in their hands, consumers everywhere can have privacy, security, and freedom when using their assets to interact with others on the blockchain. Whatever the outcome of individual projects centered around finance, it is sure that the direction of cryptocurrency and blockchain technology as a whole is headed towards increased freedom in finance.
Written By C. Lombardo, CNIR Staff
