The very fact that the crypto-sphere is hyped in today’s day and age shows that the world is increasingly going digital. Yet, the mainstream view is still predominantly associated with Bitcoin – the first and the most popular cryptocurrency. While it is benign to hold such a vantage point from a layman’s perspective, as an investor, it is an opinion that limits insight and practically drains the entire portfolio.
As many investors are starting to allocate funds to this asset class, this article could guide you through the fundamental knowledge about the crypto-world. However, bear in mind that the market is decentralized and highly volatile. Therefore, while the basic tenets would apply irrespective of the timeframe, some valuations could drastically differ over a period.
A majority of investors are still confused about the difference between blockchain technology and decentralized finance. Both terms are interrelated but differ in the scope of application in the real world. Blockchain technology is a system that acts as a digital ledger to facilitate transactions distributed across a diverse network of computers. It is basically a system of digitally encrypting and recording information duplicated over an expansive network: making it impossible to hack, alter, or corrupt data while being processed or stored. The technology is extensively used in logistics services, allowing users to keep real-time track of their packages around the globe. The most widely known implementation of blockchain technology is in Crypto Financial Services.
Colloquially referred to as ‘DeFi,’ the sector of Decentralised Finance spreads across a complex array of digital products: from cryptocurrencies to NFTs. DeFi involves a skeleton of blockchain technology to operate a colossal network of shared ledgers. With no centralized authority to verify transactions and manage supply, this area of finance uses complex algorithms to distribute the verification and storage process among users themselves. Due to the surfeit number of operants, rigging the system is rendered almost impossible. Thus, making DeFi one of the pioneering shifts in traditional financial services of modern time.