TMCnet Feature
April 20, 2021

What is DeFi, and what should you know about it?

No one would have imagined 20 years ago that a youtuber would have more audience than a television show, that a blogger would reach more readers than a newspaper, that an instagramer would follow him more people than the famous people in magazines or that a podcaster would listen to him more people than a radio show, but that moment has come. And what has happened with the social media against the mass media, is on the way to also occur in the financial world with respect to DeFi or Decentralized Finance .

This is how they define the DeFi concept in Bit2me:

Bit2me itself can be considered a DeFi, since it allows the purchase and sale of cryptocurrencies, which is the "gasoline" with which DeFi works, and also allows them to be stored safely in a wallet. We could say that this company is the equivalent for Spain of Coinbase , which is surely the best-known DeFi-based services company in the world and whose next IPO will be the litmus test for this sector to receive the definitive support of the economy traditional.

Perhaps the easiest way to learn and understand what DeFi is is through examples, and a very good way to do it is in Coinbase, which has a section called Earn, in which we can earn the tokens of certain services based on blockchain , if we carry out small courses and show that we have understood its usefulness and operation.

Some of the services that we can find in Coinbase Earn are:

Compound : it is a protocol that seeks to create an ecosystem of financing and loans through credits to its users, applying interest on the assets they have within the system, for example in the form of cryptocurrencies that are used as collateral.

Numerai : is a new type of investment fund that works collaboratively thanks to the contributions made by data scientists through their predictions of the evolution of financial markets.

Celo : is a decentralized platform operated by a community of users, which allows anyone with a smartphone to have access to financial services, such as sending money to phone numbers and paying merchants.

Stellar Lumens : is a decentralized protocol that offers its users the ability to send money anywhere in the world instantly and cheaply.

MakerDAO : It is a decentralized organization that uses the Maker protocol and two native tokens, MKR and DAI, so that anyone can borrow funds by providing collateral.

As you have seen, the DeFi use Blockchain technology to develop the financial services that until now were offered by banks and for this they create specific cryptocurrencies that replace the currencies of the countries, in addition to being based on communities, which allows the service to be provided in a decentralized manner.

Will DeFi Completely Replace Traditional Financial Services?

Surely we will not see any bank disappear because of a DeFi, just as TV, the press or radio have not disappeared because of YouTube (News - Alert), blogs or podcasts. But we will soon see that both models, the centralized and the decentralized, coexist perfectly, each having its target audience or being used in each case as best suits the users.

Therefore we have to be aware of the existence of this type of decentralized financial services, as in the last two decades we have done with social media and, if possible, not remain solely as passive spectators, but take the leading role, as they have made content creators using the new digital channels. In this case, an important advantage of the DeFi model is that to participate in it, it is necessary to have the cryptocurrencies that have been created to manage the transactions, therefore if these protocols are successful, we can also benefit from the revaluation of those assets. In a way it would be as if the moment we create an account in a bank,

If you're looking to start investing in DeFi, be sure to have a look at these best defi coins in 2021 to get an idea of where to begin.

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