14  Blockchain

Feature

DeFi

Traditional Finance

Ownership

You are in charge and hold your money

Your money is held by other companies like intermediators or Banks

Control

You are in control over your own money including how it is transferred and

how it is spent

Other companies control the management of your money. You need to trust them.

Payment latency

Transfer of funds can happen in minutes rather than days

Transfer of funds can take days due to administration and multiple parties'

involvement

Identification

Financial transaction activities is pseudonymous depending on the region you

are in. It means your identification is hidden and does not need to be disclosed

to other parties.

Financial transaction activities are tightly connected to your identity due to tight

financial regulations

Access

Open to anyone globally as long as they have internet connection and access

to technology like laptop or desktop

You need to apply to use and be part of financial services

Availability

DeFi markets do not sleep. They are open 24/7 globally

Financial markets close as per their region. They are reliant on banks, stock

exchange and employees etc.

Transparency

DeFi core architecture is based on full transparency of historical records to

anyone around the globe. Anyone can look at transactions, product data and

also inspect how the DeFi application works.

Traditional financial institutions are closed books. Their products are propriety

(mostly patented). They however must disclose the financial acttivity to

regulators.

Figure 1.7  DeFi and traditional finance comparison.