Centralized Finance
Centralized Finance (CeFi) refers to traditional financial systems where intermediaries like banks, exchanges, and financial institutions control and manage financial transactions, assets, and services. It relies on centralized authorities to facilitate activities such as lending, borrowing, trading, and custody, operating under regulatory frameworks and established trust mechanisms. This contrasts with decentralized finance (DeFi), which uses blockchain technology to eliminate intermediaries.
Developers should learn about CeFi when building or integrating with traditional banking systems, payment gateways, or regulated financial platforms, as it underpins most global financial infrastructure. It's essential for roles in fintech, where understanding compliance, security protocols, and legacy systems is crucial for developing applications like mobile banking apps or trading platforms. Knowledge of CeFi helps in bridging gaps with emerging technologies like blockchain in hybrid financial solutions.