TradFi, short for Traditional Finance, encompasses the established financial systems and institutions that have been the backbone of global economic activities for centuries. This system includes banks, stock exchanges, insurance companies, and regulatory bodies that facilitate a wide range of financial services such as lending, borrowing, investing, and payment processing. Traditional finance operates within a framework of regulations and oversight designed to ensure stability, protect consumers, and maintain market integrity. Unlike DeFi (Decentralized Finance), which leverages blockchain technology to eliminate intermediaries, TradFi relies on centralized institutions to mediate and manage financial transactions. This centralized approach provides a structured and regulated environment, but can also result in higher costs, slower transaction times, and reduced accessibility for some individuals. Despite the rise of digital and decentralized alternatives, TradFi remains a critical component of the global economy, bridging traditional economic activities with emerging financial technologies.
