A flash loan is simply a smart contract that helps you borrow money or crypto assets from a platform and later pay back without having to worry about collateral.
However you must pay it back within a short period of time, a very short period of time.
As brief as 13 seconds (An eth block takes 13 secs to be validated).
You'll need to have a computer crosscheck our transactions and ensure you'll be able to pay it back.
Naturally as humans, the timeframe given is way to short to be able to trade or carry out transactions and payback before the deadline.
But this is tech, it's possible.
With the help of code (written by you ) you can borrow and pay back within the stipulated period of time.
Why borrow?
For arbitrage trading.
Quick explanation
Arbitrage trading means buying a asset cheaper on a certain exchange and selling it on another exchange where the price is higher in real time.
With the help of code, this will possibly be executed within seconds. The platform you borrowed from charges you a fee.
Eg AAVE charges 0.09%.
There are other uses of flash loans apart from arbitrage trading which include: collateral swap and self liquidation.
That's story for another day.
