Do you find crypto terms hard to understand?
If your answer is yes, then this series is for you. Crypto Terminology: A to Z helps you decipher the alphabet soup of crypto terms and definitions, arranged in 26 bite-sized portions for you to chew on easily.
Today, we’ll explore words that begin with the letter D.
First up? Decentralized.
The world of traditional finance, as we know it, operates mainly on a centralized infrastructure. Banks, for example, hold our assets and maintain most of the control over your account.
On the flip side, how do you think a decentralized structure looks like in the financial sector? Enter the world of DeFi.
Short for “Decentralized Finance”, DeFi is also often referred to as “Open Finance”. Unlike traditional financial systems’ need for third party transactions, a DeFi system operates without the need of a middleman which, in turn, reduces differing levels of costs including time and money. Proponents say it could very well hold the promise of disrupting financial services the way streaming services disrupted cable television. If you’re wondering what DeFi runs on, this next segment is for you.
What are dApps?
You can think of dApps just like any other software applications you’ve used before — from websites to apps on your phone. What makes a dApp different from a traditional app is that it’s built on a decentralized network, free from control from any single entity.
One of the most popular use cases of dApps today is the DEX.
While decentralized exchanges are still in their infancy, proponents of DEX boast of promising developments seen in the cryptocurrency ecosystem. Even with advantages like heightened privacy, security and control over funds, it might still be a long way out before decentralized exchanges start replacing their centralized counterparts.
But don’t take it from us. What do you think? Will the continuous innovation across the industry propel DeFi, dApps and DEX towards mainstream adoption? Take our poll here!