TradFi — what is it and how does it work? 💰
TradFi is an abbreviation for Traditional Finance, i.e., the traditional financial system. These are banks, brokers, stock exchanges, insurance companies, investment funds, and other regulated financial institutions.
How does it work in simple terms?
For example, I want to buy stocks. Through a broker, I get access to the stock market, place a buy order, and the exchange and other participants of the financial infrastructure ensure the trade is executed and settled.
So in TradFi, centralized institutions, rules, and regulation play the main role. This is what TradFi is usually distinguished from DeFi, where financial transactions can be carried out using blockchain and smart contracts.
It’s interesting to watch how traditional finance is gradually overlapping with the crypto world. I think this is only the beginning of a major transformation of the financial system. 🚀
TradFi is an abbreviation for Traditional Finance, i.e., the traditional financial system. These are banks, brokers, stock exchanges, insurance companies, investment funds, and other regulated financial institutions.
How does it work in simple terms?
For example, I want to buy stocks. Through a broker, I get access to the stock market, place a buy order, and the exchange and other participants of the financial infrastructure ensure the trade is executed and settled.
So in TradFi, centralized institutions, rules, and regulation play the main role. This is what TradFi is usually distinguished from DeFi, where financial transactions can be carried out using blockchain and smart contracts.
It’s interesting to watch how traditional finance is gradually overlapping with the crypto world. I think this is only the beginning of a major transformation of the financial system. 🚀