Abstract
The invention of the Internet has paved the way for a new world of opportunities in life, including finance. Even with the presence of this invention, the traditional financial system has failed to meet expectations set up by other technological advancements. In today’s world, almost everyone has access to the Internet, yet not all of them have bank accounts. According to a recent report from the World Bank Group, approximately 1.7 billion people worldwide still do not have any access to banks whatsoever. Although the Internet has helped transfer information from one part of the world to another within milliseconds, time and spending are still needed when it comes to financial assets. In the last few years, a growing trend toward decentralization in the financial system has been stimulated by blockchain and technological innovation. Satoshi and his unique invention, Bitcoin Blockchain, started to call for peer-to-peer transactions without intermediaries or centralization of any kind. Six years later, the invention of another blockchain, Ethereum, came into existence and has become the backbone of promising decentralized finance (DeFi). This paper provides an overview of blockchain technology, discussing the DeFi ecosystem and its possibilities regarding financially including the unbanked and improving the current financial system.
Highlights
This paper provides an overview of blockchain technology, discussing the decentralized finance (DeFi) ecosystem and its possibilities regarding financially including the unbanked and improving the current financial system
In the coming years, DeFi will allow the entire financial system to operate more from the principles of mathematics and computer science, using what is known as blockchain technology
Decentralized finance is the disruption to the financial system
Summary
Blockchain integrates into many areas like finance (Foroglou & Tsilidou, 2015; Peters, Panayi, & Chapelle, 2015), (Casey, Crane, Gensler, Johnson, & Narula, 2018) in the form of cryptocurrencies, online payments, and remittances It is used in IOT (Christidis & Devetsikiotis, 2016; Zhang & Wen, 2015), smart contracts (Kosba, Miller, Shi, Wen, & Papamanthou, 2016), voting (Wang, Liu, & Han, 2018), healthcare industry (Peterson, Deeduvanu, Kanjamala, & Boles, 2017), and verification of educational materials (Srivastava et al, 2019). Any change to that software on a blockchain must go through a consensus process that no single authority has control over (Glaser & Bezzenberger, 2015) This system is transparent, because transaction data is recorded on an online public ledger that is available for everyone to see.
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