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Decentralized Finance – The future of making money

Anyone new to investing should learn about Decentralized Finance. This article will help you to understand what Decentralized Finance is and how it can benefit everyday investors. There are many uses for this type of trading, including short-term trading, long-term investing, and accumulating wealth. If you’re interested in learning how to make money using Decentralized Finance, please keep reading.


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The Internet has completely changed the financial economy. Information is at everybody’s fingertips. Yet, the “old” ways of making money are still there. Going to the bank, ask the teller for the cash, write the checks…Millions of people still using regular bank’s money-market accounts that were leading to believe it was the safest and best way to make some decent interest in return. This is not as true anymore!

The concept of Decentralized Finance or Defi, as it is also known, is not that new. But what’s relatively new is how easy it has become to outperform the actual old banking system to earn interest and fight inflation. If you have money parked on any account earning less than 5% of interest, you are actually losing money given the current US market conditions. But, how do I know that? – you might be guessing. Simple, open Google and search for “current us inflation rate.” This is how the shocking result would look like:

Google result search image highlighting current inflation rate in the US of five percent

Source: Google.com

Decentralized finance benefits

The main benefit of investing in decentralized finance systems is that an investment leaves behind no physical paper trail. In its most basic form, decentralized finance is a theory of earning money by utilizing multiple computer network protocols rather than going through a single intermediary like banks or brokerage firms. The protocol used is usually based on peer-to-peer lending, where individuals with compatible goals pool their capital together and use a messaging system to communicate their needs. An investment is made when a contract is created between the two participants that details exactly how funds will be invested. Once a contract is created, it can’t be reversed. This is where cryptocurrencies come into play, as they are the main vehicle used to perform such particular transactions.

buying-selling-stocks-online-trading-modern-flat-illustration-design-concept-website-pages-backgrounds

People would need to use an online platform to get involved in decentralized finance. These platforms will allow users to access many investment opportunities spanning multiple countries and financial markets. As you may have guessed, there is quite a bit of competition among these investment platforms. This is, in fact, beneficial, as they will fight harder to provide you with the best rates. As gold is used to back printed money, these platforms also need liquidity (actual currency deposited) to back their transactions.

Let’s say now I’d like to pay for my haircut to John, barber, and business owner. If I used my credit card, the credit card processor company would always take a cut, called “transaction fee,” (usually 2.9% + $0.30¢) from the business owner. So instead, John and I use an app called Coinbase. As I want to pay for the service rendered, John will give me its wallet’s digital address to execute the trade. The fees involved not only would be considerably less, but John could take the money received to fund a high-yield crypto account.

Another major benefit of decentralized finance is that you don’t have to wait for brokerages or large financial institutions to approve your transactions. So if you are interested in sending money out to a family member from abroad, you already have an effective vehicle to do so.

High-yield crypto accounts

Have you seen those funny ads showing how good a saving account is, offering 10 times the national average? 😊 While this article is written, the national average sits at just 0.01%. Then, 10 times will be 0.1%. Again, is it really that good?

senior pretty businesswoman with a piggy bank

Following the approach of saving money in a brick and mortar bank is no longer viable. You have to think in better ways. But are there actually better ways? Many consider investing in the stock market. The thing is, the stock market can be very volatile.  Not many can stomach watching money going up and down. Not to mention how you would react to a stock market crash, where accounts can face losses from around 25 to 45 % of their initial value.

So, what’s the alternative? Is it safe and completely risk-free?

As crypto markets have evolved over the years, new types of digital currencies have emerged as well. Stablecoin is a relatively new concept, where the main idea is you can trade one-to-one the value of the transaction involved. Following this concept, several stablecoins have been created, to mention a few couples: $USDC and $GUSD. So, let’s say you’d like to buy $5 GUSD, you pay $5 and vice versa.

Having a digital currency with the same value as the dollar, in my opinion, gives investors more peace of mind since the price won’t fluctuate in case you want to exchange it back. Here is where high-yield crypto accounts come into play. Take a look, for instance, at the current rates offered by BlockFi, a New York City-based start-up cryptocurrency financial institution:

Current rates for digital coins on the BlockFi platform
Current rates for digital coins on the BlockFi platform. Source: BlockFi Rates.

As the picture shows, you can get up to a 7.50% interest yield by depositing your hard-earned money, let’s say, in the stablecoin $USDC. Better than the national average now? I think so!

But is it safer than having it as cash in the bank? The answer to that question has widely changed these days. In the old days, banks were robed. Today’s banks can face a liquidity problem if they lend more than the actual cash held in the vault. On the other hand, cryptocurrencies can be hacked. So, the answer to that question depends on how well diversified you would like to be just to feel safe.

If you want to learn more about how decentralized finance can make your money work harder for you, at better rates than inflation, click on this link and start using BlockFi today!

Comments (1)
Ana Maria
July 26, 2022

Thanks to the author of this article. A new era for everybody is coming. The world is adopting new ways to gain, and to commerce, so we will get better experiences using knowledge. Knowledge is the real power of people in this new era.

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