$BTC
TradFi is short for Traditional Finance. It refers to the conventional, long-standing financial system that anchors the global economy. This includes central banks, commercial banks, investment firms, stock exchanges, insurance companies, and credit networks.
Unlike Decentralized Finance (DeFi), which runs on autonomous blockchain protocols and smart contracts, TradFi is built on a centralized structure governed by intermediaries (like brokers and clearing houses) and strict government regulations (such as KYC/AML protocols).
Core Pillars of TradFi
Centralized Intermediaries: Every transaction, loan, or investment requires trusted third parties (banks, payment processors, or brokers) to clear and settle.
Regulatory Frameworks: Heavily supervised by government and international bodies to protect consumers, offer deposit insurance, and ensure market stability.
Legacy Infrastructure: Relies on structured operating hours, physical branches, and interbank messaging systems like SWIFT.