WEBVTT

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Decentralized
Finance, or DeFi, is

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an emerging financial
technology based

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on distributed secure
ledgers similar to those

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used by cryptocurrencies.

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This technology
removes the control

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that banks and
institutions have on money.

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In centralized
finance, your money

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is held by banks
and corporations.

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Say you buy a gallon of
milk with your credit card.

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That charge goes
from the merchant

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to a bank, which then forwards
that information to a credit

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card network.

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Each entity in
this chain receives

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payment for its services.

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Decentralized finance eliminates
financial intermediaries.

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Using emerging
technology, it lets

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individuals conduct transactions
through peer-to-peer financial

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networks.

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You can lend, trade, and
borrow using software

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that records, collects, and
verifies financial actions

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in distributed databases.

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These databases are
accessible from anywhere.

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You just need an
internet connection.

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Decentralized finance
has several benefits.

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For one, it eliminates
the fees that banks

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and other financial
companies charge.

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It also lets anyone with
an internet connection

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transfer funds quickly
without needing approval.

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What's more, DeFi applications
give users more control.

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Money is held in personal
wallets instead of a bank.

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Still, decentralized
finance is new.

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Because it's unregulated,
there are many hacks and scams.

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There are also concerns with
system stability, maintenance,

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energy requirements,
and hardware failures.

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Decentralized finance
might also pose problems

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to existing
financial regulation.

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But if decentralized
finance succeeds,

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it's more than likely
banks and corporations

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will find ways to
participate in the system

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so they can profit from it.

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[MUSIC PLAYING]

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