A Beginners Guide To Decentralized Finance

By now you have more than likely heard the term decentralized finance. This is a new way that banking and financial services are working. It allows for peer-to-peer payments using blockchain technology.

People ask what’s in it for them. Investors can send money quickly around the world. People can access their money through digital wallets without paying the bank a fee. Those are just a few of the advantages of decentralized finance.

Here’s more of what you need to know about this technology that uses cryptocurrencies and blockchain.

How Decentralized Finance Works

There’s a big difference between decentralized finance and traditional banking. Transactions with a conventional banking account works like this. Your banking transaction history records these. Big financial institutions manage them.

Recorded in Computer Codes

Blockchain is different. Computer codes record transactions. These go on public ledgers.

Here’s what “distributed” means. It means that everyone using the same application gets the exact same copy. Code is used. Users get anonymity plus their payments get verified.

A Record Of The Assets

Not only that, decentralized finance provides each owner with a record of their assets. What that means in the end is it’s almost impossible to change the numbers.

The decentralized part means there is no gatekeeper or middleman to manage the system.

Wondering how decentralized finance gets used? The best way to answer that question is to provide a good example.

A Good Example of Decentralized Finance

Ethical Finance.co is a lease to own home ownership company that expands upon the existing model. it also called Ethical Ijara . Two crypto tokens are used.

• The Ethical Finance (ETHI) token. This is a part of a tax deductible donation that’s tradable on several different exchanges. It’s part of a lease own transaction.
• The Ijara Token. Part of the lease to own arrangement is making payments to a trust as a tenant. The Ijara token is part of this system. The tenant can buy and sell these tokens and it’s a lot like having a traditional HELOC.

Read more about this new innovation by following the #DECOM link.

Decentralized financing is challenging traditional banking. Read on to find out just a few ways.

• DeFi is threatening to wipe out the middleman.
• Decentralized finance is becoming popular enough experts think even traditional banks will need to adopt it.

Here’s the bottom line. Want to get involved in decentralized finance? You’ll need to understand the basics of cryptocurrency trading.

Alternative

Are you a practising Muslim looking for an alternative way to finance a home? Get in touch with us today. We can walk you through the basics . And answer any of your questions.