31 July 2022
2 min read
How Can Decentralised Finance Change the Country’s Economy?

Since Blockchain technology has taken its space in the Finance sector, its components like DeFi have changed many things for the better. Privacy, security, transparency, and trust are a few of the many advantages that DeFi offers when it comes to managing our money. This phenomenon has the potential to provide us with solutions to the existing drawbacks of the financial sector. Let's understand how.

What is DeFi?

DeFi, short for Decentralised Finance is just like a digital bank. But without any paperwork or intermediaries. You can lend & borrow, earn interest, make transactions, trade assets, etc. Decentralized apps (dApps) are the main way users interact with DeFi. There is no application to complete or an account to start as there would be at a traditional bank.

How can DeFi Change the World Economy?

Everyone remembers how in 2008, the world financial systems collapsed. After the collapse, a decision was taken that never again would any government allow the banking system to endanger our social and economic well-being. The finance industry has evolved to play it safe by being less experimental and refusing any change that would necessitate overhauling the entire financial structure. The reason the 2008 crisis took place was because of the high risk-taking of banks.

But, the introduction to DeFi has completely changed things for us. It is a technology made for the people. There are currently a lot of DeFi-related operations happening in the crypto realm. For instance, China is introducing its digital Yuan, the Central Bank Digital Currency (CBDC). This trend is also being followed in Europe.

Although a system built on a blockchain can typically process transactions more quickly and securely, the price volatility of these DeFi tokens is a problem that has prevented widespread adoption.

At this point, it is safe to say that interactions between businesses will also be impacted by DeFi. Decentralised applications based on smart contracts soon would start serving as an intermediary between institutions as institutions integrate into the blockchain ecosystem and the tokenization of financial assets like derivatives and securities continues to develop.


Of course, every new technology has its setbacks, but that shouldn’t stop people from exploring it. There is a huge potential for developers to come up with more solutions for the finance sector and turn it into a completely decentralised process that benefits all.

For institutions that can adapt and embrace the developments in the DeFi space, the ongoing evolution of this new financial ecosystem will present considerable growth potential.

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