{"id":4097,"date":"2024-01-31T03:44:16","date_gmt":"2024-01-31T03:44:16","guid":{"rendered":"https:\/\/digitalcoinprice.com\/blog\/?p=4097"},"modified":"2024-02-07T05:02:14","modified_gmt":"2024-02-07T05:02:14","slug":"the-biggest-changes-that-come-with-defi","status":"publish","type":"post","link":"https:\/\/digitalcoinprice.com\/blog\/the-biggest-changes-that-come-with-defi","title":{"rendered":"The Biggest Changes that Come With DeFi"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_73 counter-flat ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Content<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #223c50;color:#223c50\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #223c50;color:#223c50\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/digitalcoinprice.com\/blog\/the-biggest-changes-that-come-with-defi\/#The_Biggest_Changes_That_Are_Happening_Due_to_DeFi\" title=\"The Biggest Changes That Are Happening Due to DeFi\">The Biggest Changes That Are Happening Due to DeFi<\/a><\/li><li class='ez-toc-page-1'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/digitalcoinprice.com\/blog\/the-biggest-changes-that-come-with-defi\/#1_Removing_the_Need_for_Intermediaries\" title=\"1. Removing the Need for Intermediaries\">1. Removing the Need for Intermediaries<\/a><\/li><li class='ez-toc-page-1'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/digitalcoinprice.com\/blog\/the-biggest-changes-that-come-with-defi\/#2_Open_Access\" title=\"2. Open Access\">2. Open Access<\/a><\/li><li class='ez-toc-page-1'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/digitalcoinprice.com\/blog\/the-biggest-changes-that-come-with-defi\/#3_More_Transparency_in_Investments_and_Transactions\" title=\"3. More Transparency in Investments and Transactions\">3. More Transparency in Investments and Transactions<\/a><\/li><li class='ez-toc-page-1'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/digitalcoinprice.com\/blog\/the-biggest-changes-that-come-with-defi\/#4_Smart_Contracts\" title=\"4. Smart Contracts\">4. Smart Contracts<\/a><\/li><li class='ez-toc-page-1'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/digitalcoinprice.com\/blog\/the-biggest-changes-that-come-with-defi\/#5_Tokenization_of_Assets\" title=\"5. Tokenization of Assets\">5. Tokenization of Assets<\/a><\/li><li class='ez-toc-page-1'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/digitalcoinprice.com\/blog\/the-biggest-changes-that-come-with-defi\/#The_Only_Reason_This_Wasnt_Done_Sooner_is_Because_We_Lacked_the_Technology\" title=\"The Only Reason This Wasn\u2019t Done Sooner is Because We Lacked the Technology\">The Only Reason This Wasn\u2019t Done Sooner is Because We Lacked the Technology<\/a><\/li><\/ul><\/nav><\/div>\n<p><span style=\"font-weight: 400;\">Most of the democratic governments in the world are based on the system of representation This means that people choose someone to send to the nation\u2019s capital to represent them. In a world without the internet, this made perfect sense. Now, when everyone can vote on every single issue with a click of a button on their phone\u2026 not so much.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Another thing that is quickly getting outdated is a conventional, centralized financial world. If there\u2019s one thing that cryptocurrencies showed us is that DeFi can definitely work (no pun intended). But, this won\u2019t happen anytime soon because of things like habits, lobbying, and traditionalism.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">While we wait for this inevitable financial revolution to occur, here are some of the biggest changes that are happening due to DeFi.<\/span><\/p>\n<p>&nbsp;<\/p>\n<h2><span class=\"ez-toc-section\" id=\"The_Biggest_Changes_That_Are_Happening_Due_to_DeFi\"><\/span>The Biggest Changes That Are Happening Due to <strong>DeFi<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>&nbsp;<\/p>\n<h3><span class=\"ez-toc-section\" id=\"1_Removing_the_Need_for_Intermediaries\"><\/span><strong>1. Removing the Need for Intermediaries<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">One of the most incredible things about the DeFi is the fact that it works on a peer-to-peer platform. Every participant in the system is equal (no matter how much funds they have), and they are proportionally represented on the platforms.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">With the help of smart contracts (which we\u2019ll mention a bit later), there\u2019s no need for escrow or supervisors to ensure that the contract is honored and the terms specified there are executed.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The bottom line is that the fees are much lower since there are no intermediaries. Sure, the system still needs to charge something for upkeep, but there are not as many employees as in the traditional finance field, and there are no massive downtown buildings to pay rent for. In other words, physical infrastructure is minimal, efficient, and on a must-need basis.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">This is also liberating to a lot of people who are in need of financial services but are facing too much paperwork and jumping through hoops to get something done.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Most importantly, people are afraid that banks and big financial institutions are rigged against them. With a decentralized system, coordinating such a conspiracy would be impossible (from a practical standpoint).<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"2_Open_Access\"><\/span><strong>2. Open Access<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">What we mean when we say that DeFi has open access is the fact that the system itself is permissionless. In other words, you don\u2019t need a special permit, and there\u2019s no government body that will prevent you from registering an account. You need no special permit to start mining BTC or anything like that.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Second, cryptocurrencies and DeFi are globally available. All you need to start a crypto wallet is a smartphone, which almost the entirety of the world now has access to. The fees are low, and international payments are quick, which is why this is one of the main forms of transfer used for <\/span><a href=\"https:\/\/www.migrationdataportal.org\/themes\/remittances\" target=\"_blank\" rel=\"nofollow noopener\"><span style=\"font-weight: 400;\">remittances<\/span><\/a><span style=\"font-weight: 400;\">.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In other words, this type of financial system is a great equalizer. They say that banks want you to prove to them you don\u2019t need a loan in order to get approved for one. Well, when it comes to P2P lending, this won\u2019t be a problem that you\u2019ll have to face for long.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Exchanges are also decentralized, which means that you don\u2019t even have to create an account in order to buy or sell crypto. This provides you with an extra layer of anonymity, even though it doesn\u2019t exempt you from your tax responsibilities.\u00a0<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"3_More_Transparency_in_Investments_and_Transactions\"><\/span><strong>3. More Transparency in Investments and Transactions<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">While major financial institutions are under rigorous control, the majority of people still believe that there are all sorts of machinations and malversations going on there. It doesn\u2019t take a conspiracy theorist to believe in stories about favoritism, insider trading, and all sorts of systemic rigging.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Also, with so many new assets out there, there\u2019s always an opportunity for one to be an early adopter. All you need to do is find <\/span><a href=\"https:\/\/www.techopedia.com\/cryptocurrency\/best-presales\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">crypto presales to invest in<\/span><\/a><span style=\"font-weight: 400;\"> and use your opportunity. The majority of other assets are already too old for an early buy-in, which is why this presents a unique opportunity you shouldn\u2019t miss.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">A lot of blockchain networks are public or permissionless. This allows anyone to access the transaction history and find the details of a particular smart contract. This way, shady dealings will be a lot harder to conceal, but this will also benefit financial institutions, which will have access to all the data they need without having to deal with too much red tape.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">What we\u2019re talking about is the on-chain auditing. This will lead us to a quicker, more dependable financial system. It may sound scary, but in the long run, this is supposed to benefit everyone.\u00a0<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"4_Smart_Contracts\"><\/span><strong>4. Smart Contracts<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Out of all the DeFi concepts and technologies, it\u2019s smart contracts that have the potential to make the world of finance truly decentralized. Namely, these contracts work on blockchain technology (which makes them immutable without a proper key and near-impossible for hackers to tamper with), and they\u2019re the future of online interactions.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The way they work is simple: the algorithm is set with a special set of conditions. Once these conditions are met, the contract will self-execute.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">What does this mean? First of all, the costs are drastically reduced since there\u2019s no expensive infrastructure you have to maintain. There are no armies of lawyers, accountants, inspectors, and executives behind it.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Second, it\u2019s much more reliable. If the algorithm is set right, the system will execute every single time. This means that there\u2019s no human error or manipulation in a way that will cause a large market disruption.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Ultimately, this is the way of the future. With more and more items connected to the internet and IoT in full swing, the relevance of these self-executing contracts will grow.<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"5_Tokenization_of_Assets\"><\/span><strong>5. Tokenization of Assets<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">The concept of using a non-physical asset to represent a physical asset is nothing new. After all, when going to a bank and using your home as collateral, they don\u2019t ask you to bring your home so they can see it. What they want is paperwork that proves that you own the place, as well as documents that prove its value and characteristics.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Tokenization is a similar concept, with a few small differences. First of all, since it\u2019s a digital asset, it\u2019s much quicker and more faithfully represents the real world or digital asset.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Just think of an RPG video game where you have an inventory. In this inventory, you can have an object (an axe, a sword, or a magic wand). The icon in the inventory is a token, but once you equip it in the right slot, your character\u2019s avatar will be displayed with this item in their hand and be able to perform tasks that are related to this item.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">With the help of blockchain, this can serve as proof of ownership, and it can actually solve the issue of digital IP once and for all. The concept that\u2019s coming closest to this idea is one of NFTs (non-fungible tokens), and they have the potential to completely <\/span><a href=\"https:\/\/digitalcoinprice.com\/blog\/nfts-non-fungible-tokens-in-the-art-world\" target=\"_blank\" rel=\"nofollow noopener\"><span style=\"font-weight: 400;\">change the art world<\/span><\/a><span style=\"font-weight: 400;\"> as we know it.<\/span><\/p>\n<p>&nbsp;<\/p>\n<h3><span class=\"ez-toc-section\" id=\"The_Only_Reason_This_Wasnt_Done_Sooner_is_Because_We_Lacked_the_Technology\"><\/span>The Only Reason This Wasn\u2019t Done Sooner is Because We Lacked the Technology<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Now that we have the necessary technology, the benefits of DeFi are too numerous and great to ignore. With more and more individuals and businesses actively using cryptocurrencies, this claim is proven to be truer and truer. It\u2019s only a matter of time before this concept assumes an even bigger part in the financial world.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Most of the democratic governments in the world are based on the system of representation This means that people choose someone to send to the nation\u2019s capital to represent them. In a world without the internet, this made perfect sense. Now, when everyone can vote on every single issue with a click of a button [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":4099,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[42],"tags":[],"class_list":["post-4097","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-defi"],"_links":{"self":[{"href":"https:\/\/digitalcoinprice.com\/blog\/wp-json\/wp\/v2\/posts\/4097","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/digitalcoinprice.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/digitalcoinprice.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/digitalcoinprice.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/digitalcoinprice.com\/blog\/wp-json\/wp\/v2\/comments?post=4097"}],"version-history":[{"count":5,"href":"https:\/\/digitalcoinprice.com\/blog\/wp-json\/wp\/v2\/posts\/4097\/revisions"}],"predecessor-version":[{"id":4108,"href":"https:\/\/digitalcoinprice.com\/blog\/wp-json\/wp\/v2\/posts\/4097\/revisions\/4108"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/digitalcoinprice.com\/blog\/wp-json\/wp\/v2\/media\/4099"}],"wp:attachment":[{"href":"https:\/\/digitalcoinprice.com\/blog\/wp-json\/wp\/v2\/media?parent=4097"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/digitalcoinprice.com\/blog\/wp-json\/wp\/v2\/categories?post=4097"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/digitalcoinprice.com\/blog\/wp-json\/wp\/v2\/tags?post=4097"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}