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The Origin of Modern Decentralized Finance

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Understanding Cybersecurity Management in Decentralized Finance

Part of the book series: Financial Innovation and Technology ((FIT))

Abstract

Finance is an inseparable part of modern civilization. Although there are some inefficiencies in the modern financial system, it is far better than that of the past. Modern financial system has not only adopted a paperless workflow, but it has also drifted toward a decentralized ecosystem where the entire control is not held with a central authority who used to take all the imperative decisions.

When looking back at the conventional era, the earlier days when the term finance was not even coined and there was no official currency, exchanges used to take place with the help of available commodities. People used to purchase the necessary items in exchange for grains and animals. However, the notion of currency was soon established by launching coins. This gradually moved forward with the establishment of financial systems such as banks. These financial institutions were centralized and used a monopoly to operate the infrastructure. Centralized financial systems ruled the world with numerous technology advancements until, recently, there is an unprecedented discussion on decentralized marketplace.

Decentralized finance is an ecosystem that supports no use of intermediaries in a transaction. It comprises two or more users who want to execute a financial transaction. It is something people had not even imagined in the past. This chapter sheds light on some important foundational building blocks of decentralized finance. It digs into the roots of origin of decentralized finance and key problems faced with centralized financial systems. It also introduces bitcoins and cryptocurrencies to set up the base for upcoming chapters.

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Authors and Affiliations

  1. Saint John, NB, Canada

    Gurdip Kaur

  2. School of Information Technology, York University, Toronto, ON, Canada

    Arash Habibi Lashkari

  3. Application Security, Forward Security Inc, Vancouver, BC, Canada

    Iman Sharafaldin

  4. School of Computer Engineering, Universidad Politécnica de Madrid, Madrid, Spain

    Ziba Habibi Lashkari

Authors
  1. Gurdip Kaur
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  2. Arash Habibi Lashkari
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  3. Iman Sharafaldin
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  4. Ziba Habibi Lashkari
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Kaur, G., Habibi Lashkari, A., Sharafaldin, I., Habibi Lashkari, Z. (2023). The Origin of Modern Decentralized Finance. In: Understanding Cybersecurity Management in Decentralized Finance. Financial Innovation and Technology. Springer, Cham. https://doi.org/10.1007/978-3-031-23340-1_1

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