DeFi explained: What is decentralised finance and could it be a death sentence for banks?

euronews.com:

DeFi, short for decentralised finance, is another buzzword that has entered our lexicon, joining the likes of Bitcoin, cryptocurrency, NFTs, blockchain and the metaverse.

So, what is it?

Today, most of the financial transactions in the economy are digital. We’re still using banknotes and coins on occasions but it’s marginal.

It’s a logical step that this mainly digital finance evolves in a decentralised way, says Marc Zeller, Head of Developer Relations at Aave.

Backers of DeFi will tell you that this new system will remove the need for banks and traditional financial third parties to process all kinds of transactions.

But to explain fully what this new system means and how it works, we have to go back to the origins of crypto.

In the beginning, there was Bitcoin. Invented in 2008, by the pseudonymous Satoshi Nakamoto, the original crypto promised a revolutionary repudiation of banks and financial institutions wielding their fees and oversight on peer-to-peer payments.

In the 13 years since its creation, Bitcoin and the decentralised blockchain technology underpinning it have spawned not only 8,000 other cryptos but also a comprehensive industry spanning crypto wallets, cryptocurrency exchanges, NFT marketplaces, virtual land aggregators, decentralised autonomous organisations, and funds.

One of the innovations that developed on the back of Bitcoin and its blockchain was Ethereum.

The platform was conceived in 2013 by a young Russian-Canadian, Vitalik Buterin, and launched in 2015.

The Ethereum platform came with its own blockchain, its own token, Ether, and its own coding language, Solidity.

"If you think about Bitcoin, this is what we can think about as a DeFi decentralised payment system. Now, you can take it to the next