2.1 Traditional Finance

Traditional finance, like the kind we see in everyday banking, is mostly run in a centralized way. This means that there is usually a main authority or institution, like a bank, that everyone trusts to handle their money and transactions. This system is pretty old and most people are used to it. It works well because decisions are made quickly and it's clear who to blame if something goes wrong.

In this system, real-world assets (like buildings and land) are mostly controlled and traded within a limited financial setup. However, there are some downsides to this. For example, when people don't trust each other in a deal, they need someone in the middle, like a bank, to help them out. This can make trading real assets complicated and expensive because of all the extra steps and costs, like finding a property, paying brokers, and dealing with legal stuff.

Also, turning real assets into cash isn't straightforward. In traditional finance, these assets are only traded in certain ways. Let's take real estate as an example. If you want to get a loan using your property as security, the bank has to check everything thoroughly, which takes a long time. Besides, if you want to sell your property quickly to get money, it's a tough task because property deals can be slow.

Finally, how you can trade these assets is often limited by the rules of the central authority (like a government or a bank). Each of these authorities has its own set of rules, trading times, and processes, which can be really inconvenient. For instance, if someone in Korea wants to trade in the US stock market, they have to wait until late at night because of the time difference. And if you're dealing with assets from different countries, the rules and processes can be very different, making it hard or even impossible to trade.