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Intermediation Meaning

The process of using a "middleman" to facilitate a transaction between two parties who do not know or trust each other. In traditional finance, banks act as intermediaries between savers (who have extra money) and borrowers (who need money), taking a "spread" or a fee for managing the risk.

While intermediaries provide valuable services-like verifying identities and providing insurance-they also add cost, slow down transactions, and create a single point of failure. If the intermediary decides to block your transaction or goes out of business, the entire process stops.

The goal of many digital asset projects is "disintermediation"-removing the middleman and replacing them with code.

By using smart contracts and a public ledger, two parties can trade directly with each other with total certainty, reducing costs and increasing the speed and freedom of global commerce.

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