Centralized Finance Vs Decentralized Finance

Centralized Finance Vs Decentralized Finance

Over the years since blockchain technology started advancing, the idea of decentralized finance has been introduced. To understand the difference between centralized and decentralized finance, we have to delve deeper into the two different entities. By the end of this video, you should have a good idea about the two and how they differ in the financial world.

Centralized finance is how cryptocurrencies were originally bought and sold. By exchanges owned by a central group or person, an individual would buy the cryptocurrencies and sell them on the exchange. The centralized exchange manages the cryptocurrencies for the customer and also holds the keys to any crypto on the exchanges. In crypto they say, “Not your keys, not your crypto.”

Decentralized finance on the other hand allows for the user to own their own keys to their crypto, allowing them to be the only ones able to send it anywhere or spend it anywhere. Also, using Decentralized finance is a popular way for the unbanked to use crypto services and get involved with cryptocurrencies using specific apps built on blockchain technology. There are no exchanges involved with decentralized finance, and all processes happen in an automated fashion through applications designed on the blockchain.

The biggest difference between the two is the involvement of the exchange. While centralized finance requires the crypto exchange to purchase, sell, and trade, decentralized finance only relies on the specific technology.

Crypto assets are more vulnerable on exchanges in centralized finance because of the custodial factor of the exchanges. They have access to your crypto, and not you in this case. So, using decentralized finance, it is much safer and cheaper to stake, or create more crypto using your current crypto, trade, buy, or sell using decentralized apps.

Exchanges on centralized finance are mainly the only ways to buy into cryptocurrencies using fiat money, and are most commonly used for doing so. The exchanges have the risk of keeping everyone's crypto investments secure, and also making sure their customers are educated on the different complicated use cases of each cryptocurrency.

Decentralized finance is most commonly used through the Ethereum blockchain using apps built on Ethereum and requiring transaction fees to make most transactions go through correctly.

My best advice is to Google what you are trying to figure out, and usually you can find an article exactly about the problem you are facing.

Thanks for watching. Don’t forget to like this video, subscribe and leave any comments below and I’ll see you later.

Get Paid to Host a Helium Hotspot https://bit.ly/3oGgWgo
We are looking for locations to extend the new Helium IoT Network.
IoT future network for smart devices to run on.

If you are interested in getting paid to host a small hotspot device in your home, please join today. https://bit.ly/3oGgWgo

Earn Free BTC and BNB Daily at Betfury: https://bit.ly/3kGqDe1

For Savvy To Crypto Investment Strategy try: https://bit.ly/3uDLtOD

Earn your gas fees back on BiSwap: https://bit.ly/3uiM5ZR

How to Buy Cryptocurrency with Crypto.com https://bit.ly/39VmUTM

Get more Crypto News at https://www.howtomakecryptocurrency.com

EARNINGS DISCLAIMER:
This video is for educational and entertainment purposes only. There is no guarantee that you will earn any money using the techniques and ideas mentioned in this video. This is not financial advice.

AFFILIATE DISCLOSURE:
This video and description may contain affiliate links, which means that if you click on one of the product links, I’ll receive a small commission.