🔴The difference between central banks and decentralized banks:

🏦 Central Banks (CeFi)

Definition and Functions

These are government or quasi-government institutions that manage monetary policy, issue currency, control interest rates, and regulate other banks.

Authority and Structure

They rely on a strong central authority — such as the U.S. Federal Reserve, which determines the money supply and oversees financial stability.

Advantages

Relative stability

Legal protection (e.g., bank insurance and anti-money laundering procedures)

Ability to intervene during economic crises.

Disadvantages

Centralized decision-making delays actions and may lead to mistakes (such as the 2008 crises).

Heavy control over markets may raise concerns about privacy and control over digital money (especially with the implementation of CBDCs).

🌐 Decentralized Financial Systems (DeFi)

Definition and Functions

They rely on smart contracts and execute financial services (lending, trading, insurance…) directly between users without intermediaries.

How it Works

Published on networks like #EHT $, where anyone with a wallet and internet connection can participate. There is no central authority controlling the assets or operations.

Advantages

Full control over money without intermediaries

Lower fees and often faster execution

Open to everyone without geographical restrictions.

Disadvantages

Vulnerable to technical vulnerabilities (such as hacks and errors in smart contracts)

Price volatility and low stability.