by Mika » 17 Apr 2024, 05:22
We live in a society when finance is controlled by few people. Even though governments are elected by the common people (in democratic countries, of course), the people who are in governments are the lobbyist for businesses or work for the interest of big businesses. If you don’t see these kinds of things in government that’s exception, in almost all countries, governments are not for common people. Instead they control every aspects of the society, including finance.
The current financial system is centralized, it is controlled by government, and government is controlled by few people/businesses. Enter decentralized finance, a financial system that does not have any kind of centralized authority and is completely under the people. Decentralized finance, called DeFi, is a result of blockchain technology and cryptography that validates transactions through community and is between two individuals (peers to peers), without any middle man.
So, decentralized finance is all good? Aren’t there any problems? Well, there are a lot of disadvantages and one of the major issues is transactions cannot be reversed. Once sent, it will be gone forever. This can make people lose money when they use wrong address or wrong network. There are also other disadvantages. Let’s look in the recent phenomena.
Do you remember Squid Game Token fiasco back in 2021? It was a Rug Pull and common people lost millions of dollars. Do you remember Terra Luna? If you are in to crypto currency you certainly remember it. It was a Ponzi scheme and the creator scammed over a billion dollar. Thankfully, the person who created Terra Luna has been sent to jail but the person who scammed with Squid Game Token is at large. Do you remember something called Celsius Network that claimed itself to be a crypto bank? It declared bankruptcy and common investors lost their money. Then there is another one called FTX. It was once the third biggest crypto exchange. Millions of people have lost billions of dollars through FTX. Thankfully, the owner of FTX has been sent to jail.
These are some of the incidents from the decentralized financial market that happened in the last couple of years. Because of these causes common investors lost a lot of money. Do you know what these things happen? Well, that’s because cryptocurrencies are decentralized money and the investment and trading happens in the decentralized market without any central authority. Due to the lack of central authority that usually monitors the transactions, common investors are scammed.
If you are with centralized finance, you are less likely to be scammed because you perform transactions with centralized banks and these banks are controlled by the governments. However, with crypto and decentralized market, getting scammed is common because they exist virtually with no one to control them.
We live in a society when finance is controlled by few people. Even though governments are elected by the common people (in democratic countries, of course), the people who are in governments are the lobbyist for businesses or work for the interest of big businesses. If you don’t see these kinds of things in government that’s exception, in almost all countries, governments are not for common people. Instead they control every aspects of the society, including finance.
The current financial system is centralized, it is controlled by government, and government is controlled by few people/businesses. Enter decentralized finance, a financial system that does not have any kind of centralized authority and is completely under the people. Decentralized finance, called DeFi, is a result of blockchain technology and cryptography that validates transactions through community and is between two individuals (peers to peers), without any middle man.
So, decentralized finance is all good? Aren’t there any problems? Well, there are a lot of disadvantages and one of the major issues is transactions cannot be reversed. Once sent, it will be gone forever. This can make people lose money when they use wrong address or wrong network. There are also other disadvantages. Let’s look in the recent phenomena.
Do you remember Squid Game Token fiasco back in 2021? It was a Rug Pull and common people lost millions of dollars. Do you remember Terra Luna? If you are in to crypto currency you certainly remember it. It was a Ponzi scheme and the creator scammed over a billion dollar. Thankfully, the person who created Terra Luna has been sent to jail but the person who scammed with Squid Game Token is at large. Do you remember something called Celsius Network that claimed itself to be a crypto bank? It declared bankruptcy and common investors lost their money. Then there is another one called FTX. It was once the third biggest crypto exchange. Millions of people have lost billions of dollars through FTX. Thankfully, the owner of FTX has been sent to jail.
These are some of the incidents from the decentralized financial market that happened in the last couple of years. Because of these causes common investors lost a lot of money. Do you know what these things happen? Well, that’s because cryptocurrencies are decentralized money and the investment and trading happens in the decentralized market without any central authority. Due to the lack of central authority that usually monitors the transactions, common investors are scammed.
If you are with centralized finance, you are less likely to be scammed because you perform transactions with centralized banks and these banks are controlled by the governments. However, with crypto and decentralized market, getting scammed is common because they exist virtually with no one to control them.
