DeFi AND CeFi THE NEW TREND IN CRYPTOWORLD.
As we all know, cryptocurrencies and blockchain technology have continuously gained grounds over the years. Although generally slow in adoption, there seem to be a brighter future around this innovative Technology.
However, in the past we have witnessed different aspects of investment in the cryptoworld, ranging from ICO, IEO, STO etc. But presently what we hear is #Defi and Cefi these two have been trending in the crypto space. Also, a lot of crypto Exchanges have dived into this new trend and Okex trading platform is not left out.
Now you may be wondering, why the noise about DeFi and CeFi? What do these two represent? What are their similarities and differences? Which should I go for and what dose the future hold as regarding these two?
None the less, in this brief article I shall be taking a look at the above questions and try to give my own opinion.
WHAT DO DeFi AND CeFi STAND FOR?
As a way of definition, CeFi simple means Centralized Finance while DeFi is Decentralized finance
WHAT ARE THEIR SIMILARITIES
I would like to say here that these two ( DeFi and CeFi) can be likened to two different sources of water, say, a private borehole and a public water supply. These two yield the same fruit by supplying portable water, they are both sources of water but a private borehole is controlled by an authority, while the other belongs to all and no single person has control over the public water supply source.
In the same way, Centralized finance and Decentralized finance yield same fruits, providing Cryptocurrency financial services to participants. But have different modes of operation. They both encourage the adoption and investment in cryptocurrencies globally.
WHAT ARE THEIR DIFFERENCES
#Defi and #Cefi like I mentioned earlier, render crypto financial services differently. And possess a few features differently.
For DeFi, (DECENTRALIZED FINANCE): As the name is, it is a Decentralized platform where participants have to trust the smart contract. I would say in this case users do not have Trust issues because they rely on an already programmed technology to efficiently and effectively offer financial services therefore the safety and security of their assets is in their hands . However, there is a low level of flexibility when it comes to crypto to fiats conversion and cross chain services. Users may not be able to trade BTC, LTC and the likes. Right now majority of DeFi projects only support Ethereum based tokens.
For CeFi (CENTTRALIZED FINANCE): in this case, financial services are offered via a Centralized platform where there is an authority controlling the activities. On CeFi, users have to Trust the people behind the business. Although this mode of operations tends to be highly flexible in the sense that users can easily convert their crypto assets to Fiats and vice versa. There is also an opportunity for cross chain trading and unlike Defi, users of Cefi have to go through KYC in order to use the services. With CeFi, users could have a customer service representative whom they go to in case of issues. Remember in CeFi , users do not determine the safety and security of their assets as this is controlled by the people behind the business.
In conclusion, Although there are a few differences between DeFi and CeFi , you will agree with me that the similarities outweigh the differences also the similarities are more important to users than the differences . Therefore in my opinion, since the most important thing here is the financial services rendered by these two, I guess in the nearest feature these few differences might be sorted out and they may become one big entity working towards continuously promoting cryptocurrency usage and adoption of blockchain technology around the globe.
Interestingly, Okex Exchange and other exchanges have joined this trend already. #OkexDeFi#
You can follow me for more articles on blockchain projects: MEDIUM , LINKEDIN, TWITTER
