End of banking systems?

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In this topic I would like to cover these questions:

What is Defi? Its advantages and disadvantages. What to expect in the future?

  In a nutshell, DeFi (Decentralized Finance) is the system (applications) that can work separately from financial institutes, making all actions peer to peer such as transfers, trading, using blockchain. The main coin on which DeFi is based on is Ethereum.

  What are the guarantees? Because financial institutes ensure users from fraud and they act as trust guarantees. Products based on DeFi work using smart contracts. These are online contracts with your terms. If any terms are violated or fulfilled deal will be closed. This system gives opportunity to get rid of middleman. 

 What are the main functions: 

  • You can lend money or get loan, one of benefits is flash loans (extremely fast), common financial institutes can’t offer such an option. This is known as “yield farming”
  • Trading without middleman
  • Savings account 
  • Buying derivative assets.
A Beginner's Guide to What is Decentralized Finance (DeFi)

What are disadvantages: 

1.Predictable ones: 

Uncertainty: crypto market is still developing and there are many problems with it, thus it can work not as good as it could. 

Risks: only you are responsible for mistakes.

Smart contracts issues: it can be an issue, if there are any mistakes in code of a smart contract.

2. Unpredictable:

Although it is Decentralized, it is still in hands of developers

I guess, government won’t give a chance to develop this to such a level, when people will start using it instead of ordinary financial institutions.

Advantages:

1. Secure from environment triggers, such as covid, because all physical contacts are reduced to zero. 

2. Quick operations: getting a loan will take no more than a minute, when in a bank you should send a lot of time. 

3.Owing to smart contracts human factor is dramatically reduced. 

4. Reduced cost owing to absence of a middleman. 

5. You can’t lose the “smart contract” or it can’t be stolen, because it is extremely difficult to hack it.

Summarizing it, I would say that it is future, however, there are many pitfalls that can bury this idea. What is more, I’m curious whether it will be legal or not, because it is great competitor for state. 

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