DeFi (Decentralized Finance)

DeFi is a system of financial services—like lending, borrowing, and trading—built on blockchain networks (the technology behind cryptocurrencies) without traditional intermediaries like banks. Instead of a company managing your money, smart contracts (self-executing computer programs) handle transactions automatically. You encounter DeFi when exploring cryptocurrency investing, and it matters because it promises lower fees and faster transactions, though it's riskier and less regulated than traditional finance. For example, instead of depositing money in a bank for interest, someone might lend their crypto through a DeFi platform and earn returns directly. The tradeoff: you're responsible for your own security, and if something goes wrong, there's often no customer service to call.