Decentralised Finance (DEFI)

Recently, concerns have been raised that Decentralised Finance (DeFi) platforms are being misused by terrorist organisations to raise funds, build infrastructure, and expand their networks.

What is DeFi?

  • Definition – A financial system based on blockchain technology and cryptocurrencies that allows direct transactions between individuals and businesses.
  • No Intermediaries – Unlike banks or brokers, DeFi eliminates middlemen, reducing costs and speeding up processes.
  • Key Components – Operates through blockchains, stablecoins, smart contracts, decentralised applications (D-Apps), and digital wallets.

Features of DeFi

  • Direct Peer-to-Peer Transactions – Money can be sent or received instantly using smart contracts.
  • No Account Requirement – Users can access services with just a password, without address, phone, or email verification.
  • Multiple Wallets – Individuals can create and use several crypto wallets without restrictions.
  • Wide Range of Services – Provides savings, investments, lending, borrowing, insurance, and remittance facilities.
  • Unrestricted Access – Anyone with internet access can use DeFi platforms without censorship.
  • Full Control of Assets – Funds are stored in digital wallets, accessible anytime without reliance on banks.

Significance

  • Empowers users with greater financial independence.
  • Encourages faster, cheaper, and borderless transactions.
  • Raises regulatory concerns due to anonymity and potential misuse.

Conclusion:

DeFi holds promise for financial innovation and inclusion but also poses serious security and regulatory risks if left unchecked.

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