CeFi and DeFi: The two pillars of cryptocurrencies
CeFi and DeFi are two concepts that are quite prevalent in cryptocurrencies and Blockchain. We will discover these things in this blog for your convenience Cryptocurrencies are an advanced form of currency from the fiat ones, no one can argue with that. But eventually, even these became technologically advanced and are bifurcated into two categories, DeFi (Decentralized Finance), and Centralized Finance (CeFi). In this blog about the Best cryptocurrency news provider online, we will discuss these two divisions in detail. In the initial stage, the standard operating procedure for cryptocurrencies was CeFi. Even today, it's relevant for traders and users. Here, a centralized exchange is responsible for handling all the operations. Here, a user may get some specific cryptocurrencies and may have to pay some money to avail of the services. Also, he needs to conform to the rules and regulations applied by the exchange. Coinbase, Kraken, and Binance originally fall under this category. These exchanges are trusted by millions of people due to their core competencies. These bodies are mostly secure and offer high-level customer services. Also, most of these exchanges support fiat money and conversion, which makes them a tad bit more flexible than DeFi exchanges. And people prefer them for this reason alone. These bodies also support the concept of cross-trading (trading of different currencies like XRPs, LTCs, and BTCs). This support is not available on DeFi platforms. Now, we will be going to discuss DeFi. In DeFi, the entire process is handled via a network of automated Blockchain applications. Technically, a single exchange is not responsible here. However, that does not mean that the system is not fair, or not transparent. It reaches out to even those people with limited or no banking capacities.
DeFi is an open-source network, permissionless, and TRANSPARENT. We would like to harp on this point specifically. Here, all the normal crypto trading activities are done, including yield farming, trading, borrowing and lending, and storing cryptocurrencies. In DeFi, the focus is given to privacy and secrecy, as it employs the concept of private keys for wallets. Even though the working principle of both these systems is different, they work to offer enhanced customer experience. In DeFi, people put their trust in the technology rather than any regulatory bodies. This is another differentiation between these schools of principle. DeFi is also permission-less. There's no need to go through rigorous KYC protocols to choose and use particular cryptocurrency services. This is better for those people who are not ready to divulge their personal information or give money to strangers. The chances of any discrimination are significantly low in this model. The accessibility of the service will be enhanced to its optimum level. The trust is given to the technology, not only any person or a body but the technology itself. It is also innovative with the term of functionalities associated with it. Different exchanges are there that follow these principles, and we are ending our blog on the Best cryptocurrency news provider online on this point. We will discover the exchanges with these concepts in our next blog.