Decentralized Finance, or DeFi for short, is a digital financial system based on blockchain technology. Imagine being able to carry out all the financial activities you normally do with a bank - but without a bank.
A simple example:
Bitcoin, introduced in 2009, is the first and best-known blockchain application. It works like a digital cash system. Imagine having a digital wallet that you can use anywhere in the world without needing a bank. Many computers around the world, called nodes, manage payment transactions. You can imagine this as a public yet anonymous "cash book" that transactions are not directly linked to real identities. To make the network secure and validate the authenticity of payments, Bitcoin uses a consensus mechanism called "Proof of Work" (PoW).
Cryptocurrencies - digital money - were the first and are still the best-known application of blockchain technology. Bitcoin, as a pioneer, enables secure, direct financial transactions without intermediaries. Such an intermediary, also known as an intermediary, is, for example, a bank. Imagine being able to send money to someone on the other side of the world as easily and quickly as you send an email.
Blockchain is essentially a decentralized, distributed database. It can be imagined in two ways:
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