Additionally, investors who are new to cryptocurrency should be aware that, generally speaking, digital assets like cryptocurrencies on centralized exchanges are not FDIC insured, so they do not have the same protections as fiat in traditional finance (TradFi) and banks enjoy.
- It’s worth noting, though, that some centralized exchanges may offer certain guarantees for specific products. For example, Coinbase offers a guarantee on principal amounts within their lending program.
Centralized Finance organizations indeed have value, utility, cost-saving and, and, in the context of supporting new or inexperienced users, can offer tremendous convenience, reassurance, and easier access to yield-earning resources. For more experienced users, or those who believe in using more permissionless, decentralized means of buying, selling, loaning, or staking assets, DeFi products will likely remain the product of choice.
Additionally, as DeFi products continue to build, grow, and evolve, the industry may begin to notice that popular, well-built Decentralized Finance applications pull users and market share away from some mainstream CeFi organizations.