Centralized Finance(CEFI) and Decentralize Finance (DEFI) - Crypto

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Hello Readers!!!

Today, there's a big topic which concerns everyone in the crypto space. Everyone who ever seek having a free financial system where no one is in control of their wealth. Where they can freely acquire their wealth without being concerned about anyone taking it away from them or devaluing it right in front of their eyes.

Article is about Centralized Finance and Decentralized Finance

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Everybody knows that Finance is anything related to Money or Money itself, but before I proceed to what Centralized Finance and Decentralized Finance means, there's a great need to talk about Centralization and Decentralization.

Any activities at all, that has to do with a certain number of people or a group of people controlling, planning, framing strategies/policies and making decisions on behalf of another large number of people where the large audience have little or no say at all in the process or the activities at large is known as CENTRALIZATION

Decentralization is just the direct opposite of Centralization where all activities are directly controlled by each individuals, where nobody is in control of anyone's decision. Every member of any organisation or platform have full control of their activities and can make plans and decisions on their own without any disruption or third party input.

When this wants to be related to money. It takes us to Centralized(CEFI) and Decentralized Finance(DEFI)

Centralized Finance and Decentralized Finance


This two play crucial role in the crypto space, looking at the fact that all cryptocurrencies are said to be decentralized but only centralized platforms render trading and exchange services to crypto users, even though some DEFI platforms also render trading services, it might not be as flexible as CEFI services, in CEFI , some advantages are derived from their flexibility which includes Crypto-Fiat conversion and even cross-chain exchange.

Both has a wide range of crypto-related services but CEFI has to do with users trusting other people running the business to ethically manage their funds and execute all services being offered by the business.

While using DEFI, users only trust the protocol, they trust the technology to work as programmed to execute all services being offered.

Advantages of CEFI

  • Fast response to customer's needs
  • High level customer support
  • Cross-chain Services
  • Fiat Conversion

The above listed makes CEFI users more comfortable and they always think their funds are in the right hands most especially good customer support and fast response to their needs.

Fiat Conversion which may not be available in DEFI is also a plus to users of CEFI because they tend to have good experience, this services can only be successful with centralized entity as they ensure smooth services at all time.

Advantages of DEFI

  • Fast Growth and Innovations
  • Trsutless
  • No permission

DEFI platforms are run on smart contracts hosted on a decentralized protocol which are encoded with instructions to be followed without a third party solely to autonomously fulfill customers orders and requests.

In DEFI, there's no trust issues, users don't have to trust anyone or the people running the services, users can monitor their transactions and see how it is executed, they can control their activities without any worries.

No permission is needed from anyone to perform anything on DEFI, where CEFI always requires KYC before users can access services or before limits can be lifted. DEFI enables users to connect directly and openly access everything they want.

Picture below show the Similarities and Differences

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CONCLUSION


Like I said, this two have the big role they play within the crypto space but considering the main reason behind the creation of cryptocurrencies which is purely Decentralization. I think users are now understanding better and choosing wisely, which means DEFI will be the only thing we all do with later in the crypto space or CEFI organisations will try their possible best to integrate everything in DEFI to meet up with Decentralization which was the initial reason for cryptocurrencies.

I hope you enjoyed my small explanation of CEFI and DEFI.

THANKS FOR READING

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I sold one of my defi tokens I got from airdrop at $1. I regret that. Didn't know much about the potentials of defi tokens. Now that token is rocketing at a price close to $3. Between this was a well detailed article. I will always side with defi tokens any time than with the counterpart. Thanks for sharing.

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Hummm. Selling is always interesting when you didn't buy. At any price, you'd be making profit.

But you can always check for other DeFi tokens to buy.
Thanks for stopping by.

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