Birth of Cryptos

Making efforts to understand the Decentralized-Finance network and the birth of cryptos.

Where it all kick-started?

Let’s assume that you have a million dollars amount with you and what you can do today is that - you can buy assets with them which is called the Purchasing Power. But also, you want to make sure that 10 years down the lane whatever the money you have has the same purchasing power that you have at present.

But it doesn’t happen so. Why?

There is inflation. There is hyperinflation. There is product depreciation. There is money depreciation because currencies fluctuate. So people who have wealth are always concerned about - The money that I have should be safe always. Today it is not safe because it is regulated by that government’s economy. For example, governments in countries like Zimbabwe and Venezuela produced more money and ended up in Hyperinflation.

Birth of Cryptos

That’s how the cryptos were born. These are the part of the De-Fi (Decentralized Finance) network which aren’t tied to a government’s performance but rather is decentralized in nature and hence it is protected from inflation to a certain extent and the purchasing power extends.

Decentralized finance (De-Fi) is a financial technology based on secure distributed ledgers similar to those used by cryptocurrencies. It eliminates the fees that banks and other financial companies charge for using their services. You hold your money in a secure digital wallet instead of keeping it in a bank.

What is really fascinating is the tech behind the De-Fi systems - The Blockchain.

Blockchain is used in various other platforms and frameworks but it is extensively used in the De-Fi network. Blockchain is a system of recording information in a way that makes it difficult or impossible to change, hack, or cheat the system. A blockchain is essentially a digital ledger of transactions that is duplicated and distributed across the entire network of computer systems on the blockchain. So basically whenever a transaction happens on a De-Fi network via the Blockchain - that information is recorded in such a way that it can't be changed or hacked.

But what are the cons of using a De-Fi network? You can’t revert your transaction. Ideally, if you do a wrong transaction at a bank, you can go to your bank and revert them. But on a decentralized transaction, you can't revert them as it is being recorded in a large number of systems

To be honest, I don’t know where it is gonna reach its saturation and it is completely a personal and very subjective thought. But it is evident that the tech behind all of this is gonna evolve and if things get better this might be the next big thing that I am already getting fascinated by all the tech that is emerging around the De-Fi network.