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What is Bitcoin？
Bitcoin is a decentralized digital currency, without a central bank or single administrator, that can be sent from user to user on the peer-to-peer bitcoin network without the need for intermediaries. It was invented in 2008 by an unknown person or group of people using the name Satoshi Nakamoto and was released as open-source software in 2009. Bitcoin transactions are verified by network nodes through cryptography and recorded in a public distributed ledger called a blockchain.
Blockchain is a decentralized and immutable ledger that consists of blocks of data linked together using cryptographic techniques. Each block contains a set of information and is connected to the previous block, forming a chronological chain of data. This technology allows for secure and transparent transactions without the need for intermediaries.
Difference between DiFi and Centralized finance
DeFi, or Decentralized Finance, is a financial system that operates on blockchain technology and eliminates the need for intermediaries. It allows individuals to have control over their assets through the use of private keys, without relying on centralized exchanges or institutions.
On the other hand, Centralized Finance, or CeFi, refers to the traditional financial system where intermediaries such as banks or financial institutions play a central role in managing and controlling assets. In CeFi, individuals rely on these centralized entities to hold custody over their assets and facilitate transactions.
The main difference between DeFi and CeFi lies in the level of centralization and control. DeFi provides individuals with greater autonomy and control over their assets, as they hold custody and manage their own private keys. In contrast, CeFi relies on centralized entities to hold custody and manage assets on behalf of individuals.
Additionally, DeFi offers greater transparency and accessibility, as it operates on open and permissionless blockchain networks. CeFi, on the other hand, may have limitations in terms of accessibility and transparency due to the centralized nature of the system.
In summary, DeFi and CeFi represent two different approaches to finance. DeFi is characterized by decentralization, individual control, and transparency, while CeFi relies on centralized entities for asset custody and management.
