It would be no surprise if people confuse Decentralized Finance (De-Fi) with Decentralized Apps (dApps) because both have so many commonalities. Blockchain technology is a common thread between these two aspects. Both of them are built on the support of blockchain technology and the purpose is to create a decentralized system for making all kinds of transactions.
The only difference is their specifications. De-Fi enabled apps are focused on providing a platform to make secure transactions in the financial sector only. Finance and Economy, Wealth Management, Monetary Transactions, Insurance are the areas where De-Fi Applications are specifically used. Decentralized Apps (dApps) are focused on all possible sectors they could lay their hands on.
Unlike De-Fi, dApps are not limited to financial transactions only. They use Smart Contracts to operate specific operations. Smart Contracts are the transactional operations run on the mutual consent of the parties registered in the P2P network. You won’t be able to make any changes or amendments in the Smart Contracts unless all the nodes in the network come together and approve the changes on mutual consent.
De-Fi and dApps – Decentralized System
To put it simply, De-Fi is just a part of dApps that is focused on financial operations only. dApps is more elaborated and there are no limitations to its features or scalability. People strive to download the best De-Fi Apps for making financial transactions. It helps them to eliminate the intermediaries and unnecessary intervention of government bodies. dApps are more like open-source entities that help people to take leverage of blockchain technology to manage every possible transaction on a secure P2P network using cryptographic algorithms.
Ethereum, Monero and, Monero are some of the primary examples of open-source cryptocurrencies. Chainyard, EOS Dynasty and Brave are some of the examples of dApps. If we talk about the features of De-Fi and dApps, it will go endlessly because the current era is in dire need to a decentralized system. The centralized way of processing and operating the transactions have become obsolete and they no longer serve the purpose.
We already have a lot of discrepancies and drawbacks to deal with. De-Fi and dApps provide the ultimate security and eliminate all the intermediaries. More importantly, they eliminate the imposition of government and prevents them from levying unnecessary taxations and processing fee. De-Fi and dApps are no longer an option for us. They are an absolute necessity for the current world.
Need for Decentralized Systems
The great depression (August 1929 – March 1933) and the recession (December 2007 – June 2009) are the great examples of the failures of the centralized system. When the last recession happened, it motivated a lot of people to develop a system that provides absolute assurance to the economic operations so that it never fails again in the future. That is why Bitcoin was introduced in 2009.
Bitcoin was the first cryptocurrency to propose the need for a decentralized distributed ledger system that does not need a government’s intervention and it operated securely on a P2P network. It has gained huge support and popularity from the people despite so many skepticism and scrutiny. Bitcoin has recently introduced a new fork and it is called Bitcoin Latinum. It is said to have revolutionary capabilities.
The applications of Bitcoin Latinum are so many. The De-Fi and dApps are signs that our whole world is going through the next step of evolution and that is decentralized systems. Currently, there are more than 5000 cryptocurrencies in the world. Every other organization is trying to create its cryptocurrencies to make monetary transactions and trade. It is going to help people to run their businesses without the need to answer any governing authorities and cast away all the middlemen.
Many organizations and industries are getting benefitted by the decentralized system which was possible only because of Blockchain Technology. There are 3 elements that exist in Blockchain Technology – Distributed Ledger System, Peer-To-Peer Network and Cryptography. These three elements can be used to develop applications that are immune, safe and decentralized. That is what we need in today’s generation.
De-Fi Apps and dApps could be installed through any android device and they can be downloaded from the internet too. Now, you also have the option to mine your own cryptocurrencies through some decentralized apps.
- The applications of De-Fi and dApps are so many and they both run on blockchain technology.
- If you ever wonder the main difference between these two applications, you can simply put it this way – De-Fi is limited to financial services and dApps provide more than just financial services.
- dApps can be used for developing applications related to gaming, gambling, education and basically anything that requires the transaction of data. Besides, every other element or entity in our world have transactions.
- That is why APPs are no longer an option these days, they have become a dire necessity these days.
We have seen the features of the centralized system. It is compromised in so many ways and it has many loopholes which make room for several infiltrations. Decentralized systems are far better than centralized systems.