DeFi, or Decentralized Finance, is a new financial system built on blockchain technology, making it distinct from traditional finance. In traditional finance, financial services are provided by centralized intermediaries, such as banks. On the other hand, DeFi relies on decentralized networks and smart contracts, eliminating the need for intermediaries and making financial services more accessible and transparent. DeFi also offers new financial instruments, such as yield farming and decentralized exchanges, which are not available in traditional finance. Additionally, DeFi is more inclusive, as it operates on a global scale and is open to anyone with an internet connection. DeFi has the potential to disrupt the traditional financial industry and create a more equitable financial system.

Decentralised Finance (DeFi) is a blockchain-based financial system that operates without traditional intermediaries such as banks, brokers, or financial institutions. Instead, DeFi uses smart contracts to automate financial services, including lending, borrowing, trading, and earning interest. Traditional finance relies on centralised organisations that control transactions, verify identities, and manage customer funds.

One of the main differences is accessibility. DeFi platforms are generally open to anyone with an internet connection and a cryptocurrency wallet, while traditional financial services often require bank accounts, credit checks, and regulatory approvals. DeFi transactions are typically processed on public blockchains, making them transparent and available for verification. In contrast, traditional financial systems operate through private databases.

DeFi can offer faster transactions and lower fees, especially for cross-border payments. However, it also carries risks such as smart contract vulnerabilities, hacking, and regulatory uncertainty. Traditional finance provides stronger consumer protections and regulatory oversight but may involve higher costs and slower processing times.