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Bitcoin DeFi: What Is It and Why Should You Care!?

Bitcoin used to be digital gold with an important but limited use case. A sort of retirement plan on a cold wallet. But, slow and steady, even Bitcoin is changing. Let me tell you why you should care.

Bitcoin DeFi, short for decentralized finance, is poised to make significant strides in the coming years, according to industry experts. Do you remember that I mentioned tokenization in a previous article? Anyway, according to big players in finance tokenization is the future. I believe that I will thank myself for knowing about it this early.

The gist of the tokenization story is that other coins than Bitcoin have created a thriving market to trade, earn yield and borrowing and lending. The Ethereum blockchain alone has transformed the financial landscape with its use case. Now Bitcoin is hoping to do the same with the backing of the safe and sturdy Bitcoin blockchain.

The Bitcoin ecosystem is creating standards for creating tokens on the blockchain including Taproot assets, ZK coins, and RGB. I know the crypto space is hopelessly bad in naming developments. In short, Taproot Assets is a protocol for issuing assets on the Bitcoin blockchain, ZK coins are a type of cryptocurrency that focus on privacy and anonymity, and RGB is a protocol for issuing and transferring digital assets on the Bitcoin blockchain. You need to know that these are likely set for exponential growth in the coming years. At least according to industry insiders…

Bitcoin DeFi places strong emphasis on sound finance, wealth preservation, decentralization, and good governance.

The word in the crypto space is that the Bitcoin community is driven by the creation of tools for real-life financial transactions rather than speculative activities.

Sure that sounds great, but who cares?

This unique focus on robustness and security sets Bitcoin DeFi apart. Basically Bitcoin is betting that the oldest and most trustworthy blockchain of all will attract investors. They sure have a point as Bitcoin is the biggest of all cryptos. There’s even a big community that thinks that Bitcoin is the only necessary crypto coin. All other coins are shit. I do not agreee. Let’s build together instead.

Anyways, leading the charge in Bitcoin DeFi the Sovereign ecosystem and the broader Rootstock sidechain ecosystem. Sovereign, has emerged as the dominant platform in Bitcoin DeFi, offering a comprehensive suite of features, including swaps, trades, limit orders, margin trading, and borrowing and lending. Its been developing for over two years and currently represents over 50% of all Bitcoin DeFi activity.

The rise of Bitcoin DeFi has captured the attention and interest of both the Bitcoin community and the wider crypto world. Developers and innovators are shifting their focus from Ethereum to Bitcoin, citing concerns over Ethereum’s scalability and a desire to build on a more stable and enduring platform. Not a lot has happended on the Bitcoin blockchain since it started and these developments feels like new birth.

The impact of Bitcoin DeFi on society is expected to be profound as tokenization gains momentum on the Bitcoin blockchain. As always, I raise a warning voice. No one knows the future, but this development is worth following. The ability to create tokens on good-old Bitcoin will expand opportunities for wealth creation and financial inclusion.

In summary, Bitcoiners will say that other blockchain projects will struggle to compete with the reliability and neutrality that Bitcoin offers. But proponents of Ethereum and other altcoins will disagree. I agree that Bitcoin DeFi will make Bitcoin increasingly relevant and keep it on top of the crypto market place. But I am also convinced that the use case of altcoins will continue to revolutionize the financial space. Keeping an eye on the entire space is wise.