1:24
novice
June 13, 2022
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what is decentralisation, and why is it a good thing?

The easiest way to explain decentralisation is to describe its opposite: a centralised system relies on banks and other third parties to complete day-to-day transactions, with each party charging a fee to complete their part of the transaction, so each party is profiting from this centralised system.

For example, you buy a loaf of bread with your card from your local store. The payment goes from the merchant to their acquiring bank which forwards the transaction details to the credit card network. Before we even explain decentralisation, this system already sounds antiquated.

A decentralised system removes the need for any of the above mentioned third parties; it can freely transfer funds without the need of an acquiring bank or credit card company. With the use of blockchain, decentralised finance (DeFi) allows for peer-to-peer (P2P) payments to be made securely, quickly and with as little need for human interaction as possible to complete the transaction.

So you could buy that same loaf of bread for a much cheaper all round price as the merchant would not have to incorporate third party processing fees into the price of the bread. Already, this one example of how decentralisation works encourages financial inclusivity for smaller business. Crypto and decentralisation go hand-in-hand, as Crypto works in a system where there isn’t one single entity controlling what happens; encouraging decentralisation and disparaging the current centralised system the world works on, both financially and societally.

DeFi is still incredibly new, so while the benefits are obvious when explained, the current state of DeFi is rife with scams and people exploiting the system. However, as we progress and regulations are ironed out, decentralisation can play a big part in crypto becoming the future of finance and even society.

*The content hereby presented is for informational purposes only. Nothing of this content that is available to you shall be considered as financial, legal or tax advice. Please, keep in mind that trading cryptocurrencies pose a considerable risk of loss.

*The content hereby presented is for informational purposes only. Nothing of this content that is available to you shall be considered as financial, legal or tax advice. Please, keep in mind that trading cryptocurrencies pose a considerable risk of loss.

what is decentralisation, and why is it a good thing?

The easiest way to explain decentralisation is to describe its opposite: a centralised system relies on banks and other third parties to complete day-to-day transactions, with each party charging a fee to complete their part of the transaction, so each party is profiting from this centralised system.

For example, you buy a loaf of bread with your card from your local store. The payment goes from the merchant to their acquiring bank which forwards the transaction details to the credit card network. Before we even explain decentralisation, this system already sounds antiquated.

A decentralised system removes the need for any of the above mentioned third parties; it can freely transfer funds without the need of an acquiring bank or credit card company. With the use of blockchain, decentralised finance (DeFi) allows for peer-to-peer (P2P) payments to be made securely, quickly and with as little need for human interaction as possible to complete the transaction.

So you could buy that same loaf of bread for a much cheaper all round price as the merchant would not have to incorporate third party processing fees into the price of the bread. Already, this one example of how decentralisation works encourages financial inclusivity for smaller business. Crypto and decentralisation go hand-in-hand, as Crypto works in a system where there isn’t one single entity controlling what happens; encouraging decentralisation and disparaging the current centralised system the world works on, both financially and societally.

DeFi is still incredibly new, so while the benefits are obvious when explained, the current state of DeFi is rife with scams and people exploiting the system. However, as we progress and regulations are ironed out, decentralisation can play a big part in crypto becoming the future of finance and even society.

*The content hereby presented is for informational purposes only. Nothing of this content that is available to you shall be considered as financial, legal or tax advice. Please, keep in mind that trading cryptocurrencies pose a considerable risk of loss.

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