DeFi vs. Traditional Banking explained for complete beginners in very simple terms

Traditional Banking:

-banks are essential in the financial industry, facilitating transactions, accepting deposits, and providing credit;

-however, banks are subject to human-related risks like mismanagement and corruption;

-the 2008 financial crisis exposed issues in traditional finance, highlighting the need for improvement;

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DeFi (Decentralized Finance) Aims to Improve Finance in Three Key Ways:

1. Payment & Clearance System (Remittance):

-sending money across borders through banks involves fees and delays;

-DeFi and cryptocurrencies offer quicker and cost-effective transfers, bypassing intermediaries;

2.Accessibility:

-many people worldwide lack access to basic banking services;

-DeFi, accessible via the internet and mobile phones, can provide financial products to the unbanked;

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3.Centralization & Transparency:

-traditional banks can fail, leading to systemic issues.

-DeFi aims to decentralize power and provide transparency through open-source code and decentralized governance;

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TLDR:DeFi seeks to make finance more accessible, reduce centralization, and enhance transparency compared to traditional banking systems. It's a movement toward inclusive and censorship-resistant finance.

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This info was put togheter by me in a simplified way after reading the first chapter from the How to Defi book from Coingecko. Hope it cleared some questions!

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