Difference between DeFi and FinTech

977Iti

Many people may confuse the two, so here's a detailed explanation of the definitions. Traditional FinTech is based on existing fiat currency systems, such as the US dollar, New Taiwan dollar, Japanese yen, etc. The issuers are the central banks of various countries, endorsed by national credit, and services such as payments, remittances, loans, and investment are derived. For example, the recent issuance of pure online banking licenses in Taiwan, moving all banking services online, allowing users to make purchases with mobile payments, engage in lending on P2P platforms, and the intermediate transaction medium used is fiat currency, so all fall under the scope of financial technology.

DeFi, on the other hand, is based on "virtual currencies,"and the issuance foundation of currency becomes "code," with all rules determined by code rather than a central authority (Code is Law). Through this, a virtual currency system is established, such as Ethereum, DAI, USDT, and USDC, while also developing financial services for payments, lending, and speculation.

Now, the question arises: since there is already FinTech making financial services digital, why do we need DeFi? In fact, the value of DeFi lies in "decentralization"and "reducing transaction barriers." The virtual currency system is built on the internet and is not restricted by geography and regulations like FinTech. Through virtual currencies, users can bypass the cumbersome procedures of traditional banks, participate in global financial activities, and transactions with people on the other side of the world are no longer obstacles. In the past, the internet facilitated the flow and sharing of global information, and DeFi makes direct financial flows possible.

Iravan774

It's necessary to understand the differences between them.

Niti998

I don't know what their content is, so the differences are even more unclear.

Jatin255

We still don't understand these differences.