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Defi (Decentralized Finance) Will Lead To A Revolution In The World Of Financial Services

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  • Krzysztof Marecki
  • Agnieszka Wójcik-Czerniawska

Abstract

A financial system is a network of institutions, regulations, and financial products and services available on a given market. We have local law as a basis. We have institutions that create and enforce them. Important entities are centres that provide financial services, such as banks, stock exchanges and brokers. After all, we have different products and services. From simple ones as bank accounts and deposits, through various forms of loans, to derivatives. Finally, we have clients who use this financial booth. On the one hand, all this is done to provide capital where it is needed and can be used best. On the other hand, provide a profit to the capital providers. The third important function of the financial system is to eliminate the risk of various economic activities. A developed, healthy financial system is the basis for the development of a strong economy. DeFi, on the other hand, is a decentralized financial system, which means that it does not have one central organization or institution that would be responsible for the entire system or its individual elements. Decentralization is possible because DeFi is based on a public blockchain using smart contracts. This article will present both the DeFi mechanism and the overall issue of finance-technology and its impact on the world of traditional finance, in particular that at the moment in the COVID-19 era, cashless services, e-commerce and the search for capital investment opportunities in new funded sources has become the number one topic among researchers / scientists and investors. This article will present both the DeFi mechanism and the overall issue of finance-technology and its impact on the world of traditional finance, in particular that at the moment in the COVID-19 era, cashless services, e-commerce and the search for capital investment opportunities in new funded sources has become the number one topic among researchers / scientists and investors. It should be emphasized that virtual finance, including the virtual circulation of money, minimize the need for interpersonal contacts to zero. This is important because the use of funds and shopping in the comfort of your own home reduces the need for interpersonal contacts, which at the same time contributes to the spread of the virus among people. On the other hand, the DeFi market is still in its infancy and is largely undervalued given its potential to disrupt the traditional financial sector - hence its enormous growth potential.

Suggested Citation

  • Krzysztof Marecki & Agnieszka Wójcik-Czerniawska, 2021. "Defi (Decentralized Finance) Will Lead To A Revolution In The World Of Financial Services," Economy & Business Journal, International Scientific Publications, Bulgaria, vol. 15(1), pages 284-290.
    • Handle: RePEc:isp:journl:v:15:y:2021:i:1:p:284-290
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    References listed on IDEAS

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    1. Yousaf, Imran & Nekhili, Ramzi & Gubareva, Mariya, 2022. "Linkages between DeFi assets and conventional currencies: Evidence from the COVID-19 pandemic," International Review of Financial Analysis, Elsevier, vol. 81(C).

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    More about this item

    Keywords

    decentralized finance; blockchain; cryptocurrencies; financial service; virtual finance; flat finance;
    All these keywords.

    JEL classification:

    • A - General Economics and Teaching

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