Hello everyone, hope you all are doing good? I'm back with the Part 2 of this amazing series, Understanding CeFi, DeFi & Yield Farming. If you haven't read the Part 1, I strongly suggest you that by clicking here. In today's article we would be looking at Flaws in Centralized Finance.
There are so many flaws that can be found in CeFi system, and that gave rise to introduction of the DeFi system. Below are some of the notable flaws in the Centralized Finance system;
- No Absolute Control
- Intermediary factor
- Security
No Absolute Control
This is one of the major flaw of the CeFi system. Users, don't have absolute control over their account, as they are different regulations and rules to the way and manner they transact. For instance, we have a daily limit on the amount we can be able to deposit in our account and withdraw from our account. Some months back, Nigerian government, ban us, the citizens from depositing and withdrawing from any cryptocurrency related platform. No absolute control on how we use our very own funds in our account.
Intermediary Factor
The intermediart factor is also a notable and major flaw of the centralized finance system. The high cost of processing financial transaction is quite alarming. Currenntly, in Nigeria, any time, you receive money you pay a fee, it is quite laughable but it is happening. At the end of month, you get charged text messages fees and some other fees, which are quite laughable too. Sending money from Nigeria to any other country, is a complex issue, as you will be asked for Identity card, pay huge transfer fees and also it takes about 2 or more days for the transaction to be completed.
Security
This is yet another notable flaw of the centralized finance system. Majority of people are living with fear of their account been hacked. A close friend of mine, has lost over $500 from his account twice and he didn't know how it happened. You may wake up and see your account frozen, and you can't do anything about it. That's why I hardly have funds in my account, because our money is not safe and secured in our bank accounts. Whenever I need funds, I send from my DeFi wallet to my account, using P2P(Peer to Peer) as crypto is banned in Nigeria.
Those are the three main and notable flaws in Centralized Finance, which majority of us are still facing till this very day.
I hope you all found the article interesting and exciting. Do well to share your thoughts about the article in the comment section below. Thanks.
