Feds arrest couple and seize $3.6 billion in stolen cryptocurrency

today. Most financial transactions in the economy are digital. It’s no longer banknotes and coins exchange from hand to hand, but numbers in databases, everything that we know today, like all the financial transactions of the economy will be automated, meaning that everything will be code, what we call self executed code. These experts are talking about D five short for decentralized finance defi is an umbrella term for an ecosystem of financial applications built on Blockchain technology that would remove the need for banks or trusted third parties to handle financial transactions defi is based on the same decentralized Blockchain technology as Bitcoin. If you want to learn more on how Blockchain and Bitcoin work, take a look at our previous explainers on our Youtube channel Instead of just using the Blockchain for a trust. This payment system ethereum. A new Blockchain conceived of in 2013 looked at the technology and ask themselves if they could do more with it. If you think about Bitcoin, this is what we can think about as a defi decentralized payment system. Now you can take it to the next level and not just do payments, you can do lending, you can do credit, you can do mortgage, you can do trading, can do all other things in the same kind of concept. The ethereum platform gave tools to developers to create entire programs that could be stored on the Blockchain. These came to be known as smart contracts, essentially. Smart contracts are pieces of code that automatically execute actions if certain parameters are met any contract that you do in the real world, whether it’s you’re taking a mortgage or you’re asking for a loan, it’s rule based, so this rule base can be coded exactly. Exactly. Okay, bye. Now we know that defy services run on a Blockchain and can replace traditional third parties using pieces of code called smart contracts. But why would we even need a decentralized financial system? So no intermediaries more efficiency and for the experts, it also cuts down on costs. So potentially it’s efficient, it’s cheaper. And finally, divi is supposed to be an open democratic system, centralized finance can definitely democracy society, especially if you think about all the other underserved communities, the unbanked, underbanked with decentralized finance, you don’t need a bank. It is accessible for everyone who has the Internet, as long as you have internet, right? You need internet for that. So what kind of services offered by the traditional financial system can defy handle nuclear swap. You can do anything from loans and insurance to derivatives and crowdfunding here, for example, is how defiant crowdfunding could work. Let’s say you want to raise funds for a charity goals. Normally you would have to trust a third party platform to collect the funds from the donors and give them to the charity when the goal is reached. But what if you could replace this intermediary and save on platform fees instead, you could simply define the parameters of this exchange and encode it in a smart contract on the Blockchain. If the criteria in the smart contract is met, money is automatically sent to the charity? If it is not met, the funds are returned automatically to all of the people that have donated Simple. No. Well there is one problem would defy generally you have to use cryptocurrencies to use these financial tools and that means dealing with the extreme price volatility of these coins. So to get around this, developers created what are known as stable coins economies. Your detective unique more speculative detective, speculative detective. The value of a stable coin is usually pegged to the US dollar. This means that you can have the privacy and security of using crypto and defi applications while also keeping the stability and trust of fiat money. So if defi promises to democratize finance securely and efficiently, what could possibly be the catch? The first risk is bugs in smart contracts. If the code includes an air, the error will be executed again and again. If we think about our crowdfunding example, if the funding goal isn’t properly defined in the code, the money could be collected but never distributed imprisonment, consequence the second big risk is hackers, finding and exploiting breaches in smart contract code, it exists. Rescue expertise, North industrial, the accurate in the prison prefer many local to the protocol. The prison prefer The 3rd big risk is volatility. Finally, newcomers to the ecosystem can be swayed by untested defi projects. So if we can do most of the financial transactions we do now with smart contracts and defi, is this really going to be the end of banks and financial institutions as we know it? The question is, to what extent will, how will the rest of the world really want to be on decentralized finance? Because ultimately, a key model of the decentralized finance world is, you know, you’re going to be your own banks, but being your own bank comes with a lot of downsides, puts all the responsibility on yourself, Fintech in the front, defined in the back, which is