31/10/2021
How did DeFi get its start?
☝️Humans bartered initially for goods and services. But, as humans evolved, economies evolved: We invented currency to make it easier to exchange goods and services.
☝️ Subsequently, coins helped usher in innovations and created better levels of economies. However, progress comes at a cost.
☝️Historically, central authorities have issued currencies that underpin our economies, which eventually gave them more power as more people began to trust them.
☝️However, trust has been broken from time to time, which makes people question the centralized authorities' ability to manage said money.
Why was DeFi developed?
☝️ DeFi was developed based on the idea of creating a financial system that is open to everyone and minimizes the need to trust and rely on a central authority.
It’s argued that DeFi started in 2009 with the launch of Bitcoin, which was the first p2p digital money built on top of the blockchain network.
Through Bitcoin, the idea of ushering transformation in to the traditional financial world using blockchains became an essential next step in the decentralization of legacy financial systems.
The launch of Ethereum and, more specifically, smart contracts, in 2015 made it all possible. The Ethereum network is a 2nd generation blockchain that first maximized the potential of this technology within the financial industry. It encouraged businesses and enterprises to build and deploy projects that formed the ecosystem of DeFi.
DeFi brought a plethora of opportunities to bring about a transparent and robust financial system that no single entity controls. But the turning point for financial applications started in 2017, with projects facilitating more functionalities in addition to just money transfer.
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