DeFi will be the new future of the financial industry. Right now, the infrastructure is emerging technology. With time, solutions will come and make DeFi available to everyone anywhere in the world.
Anika Digital Holdings is working on DeFi technologies to evolve with. We build projects in rural communities to bring life back to these areas. Our company believes in God and the power of mother nature. That’s why we’re one of the few companies that use sustainable practices to run our cryptocurrency facilities.
In this article, we’ll discuss how DeFi creates a new opportunity for everyone worldwide. But before that, let’s learn what DeFi is and how it works in layman’s terms.
What is DeFi?
DeFi is the shortened form of Decentralized Finance. It makes the direct peer-to-peer (P2P) transaction between two parties possible without mediators like banks.
This decentralized term can be a puzzle to many. So let us explain a bit more about decentralized and centralized finance. Banks and brokerages are centralized financial institutes that offer various financial services to us and supervise traditional digital exchanges.
Since DeFi is decentralized, it doesn’t need any intermediaries like banks or brokerages. Anyone living anywhere in the world can use DeFi to send, receive, or lend money to anyone if they have access to the internet.
How DeFi Works?
Before describing the technical process, let us explain how individuals can use DeFi – It is based on blockchain and cryptocurrency technology. In this financial world, crypto is similar to money. DeFi users can save their crypto balance in a digital wallet and transfer their funds using DeFi in minutes.
DeFi infrastructure is a build of software and hardware that makes the P2P transaction possible. The technology also includes the use of connectivity and security protocols.
Blockchain technology makes DeFi safer and more attractive to users who understand it. Blockchain is a secured database. At the same time, it’s a distributed network. That means no one party can control or hold the blockchain network.
The blockchain users verify the transactions, which are recorded in a block. After a transaction, the block gets closed and encrypted. And a new block is created that holds the previous block’s data. The blocks contain transaction data, and all blocks are chained together.
That’s the core reason blockchain is a secure network. Because no one can alter the data on the blocks without interrupting the other blocks. So there’s no way one could change the blocks/data.
What Are the Benefits of DeFi?
DeFi is very popular among some people because it eliminates the intermediaries from digital transactions. As a result, the peer-to-peer (P2P) crypto transaction gets more convenient for the user, just like PayPal. Even better in some cases. DeFi can make digital transactions borderless and instant.
When there is no regulation from the banks or other third parties, the funds will be transferred in minutes. Rural communities and underdeveloped countries will be benefited from this opportunity. They can easily access cross-border transactions, which is still a massive issue in many countries and rural areas.
Retailers and businesses worldwide will also have a golden opportunity to transfer funds. Companies can pay or receive crypto funds in exchange for goods or services without geographical restrictions.
DeFi isn’t limited to paying and receiving. It’s also possible to lend and borrow money on DeFi. Both parties involved in the deal can negotiate their interest rates and make money landing in your ‘account’ much more hassle-free and flexible regarding the terms of the payment.
We know DeFi isn’t dependent on centralized financial institutes, but that doesn’t eliminate all the fees or interest rates. In time, there will be a much lesser fee than the standard fees we have right now. And there will be countless options for the users to borrow money, unlike the banking system.
In short, through DeFi, you can—
Transfer crypto funds anywhere in the world
Get a new opportunity to generate income
Obtain flexible loan facilities with lower fees
Is DeFi for Everyone?
It’s an emerging technology which still not ready to be used by everyone. The procedure is complex, and there is a higher risk of fraud and scams. Plus, some other challenges, such as energy consumption, hardware failure, and system maintenance.
But is there hope? YES.
Anika Digital Holdings strongly believe in the scope of DeFi. We know the growth of DeFi is inevitable, and DeFi can create a solution that reduces the growing wealth gap worldwide.
Anika Digital Holdings | Creating Opportunities With DeFi
We’re working on a solution that covers decentralization, DeFi, and the use of resources in a sustainable way. Anika Digital Holdings intensely practices sustainable energy consumption to fight the challenges that arise with cryptocurrency and blockchain. We’re also working on the DeFi technology sector to make it available to rural communities around the world.