Benzinga 04

Emergent enterprises in Decentralized Finance

Decentralized finance utilizes blockchain technology to provide financial services such as borrowing, lending, and trading without the need for traditional financial intermediaries like banks.

The main feature of blockchain technology is to eliminate the need of trusted third parties.

The problem with electronic transactions is that if two persons want to exchange digital assets they have to trust each other.

For example if Alice and Bob want to exchange documents, Alice may send the document to Bob,but Bob may decide not to send his document.

The only way to solve this problem is the use of an escrow system, where both Alice and Bob trust a third party to keep the documents until both parties fulfill their obligation.

The escrow receives Alice's and Bob's documents, and delivers the documents only if the two documents were handed in.

Bitcoin's blockchain functions precisely as an automated escrow system where people can exchange the digital assets without the need to trust a third party.

The blockchain functions as the trusted third party.

Many DeFi projects use blockchain technology to function like an automated escrow system.

Entering the world of cryptocurrency requires a point of contact with the traditional