DEFI is one of the most prominent applications when it comes to blockchain applications. Over the past few years, DeFi’s abbreviation is decentralized finance, growing exponentially, and so far, spending and investing billions of dollars in the mainstream has been more prominent than ever.
Nevertheless, it is clear that, besides Ethereum and Ethereum Killer Tokens, Defi Space mainly leaves Bitcoin off the market. But some enthusiasts speculate that in the coming years, we can see the rise of Bitcoin in the Defi space. But is this possible?
Introduction to Defi
Essentially, decentralized finance involves blockchain technology and its by-products used to provide financial services to consumers. Usually, this is to give you more access and convenience you can enjoy in the mainstream financial world.
An example of a Defi service is insurance. Often, you will have to interact with a mainstream insurance broker to get the coverage and it is not available to everyone. With DEFI you can essentially get insurance online, which is powered by smart contracts. Businesses and individuals who may be denied or face slow service with mainstream insurance brokers can turn to the Defi platform according to their needs.
The same is true for token exchange, lottery, etc. We have also heard of decentralized exchanges, essentially, those exchanges exchange tokens in a centralized manner. Another example is a casino. Online casinos have been famous for several years, but blockchain-based casinos allow users to enjoy these services without setting up an account. Many of these platforms accept major tokens like Bitcoin, as Andjelija Blagojevic explains, Bitcoin-friendly platform It is becoming the norm in the industry.
Decentralized finance took off for the first time in the late 2010s, especially during the pandemic on the 19th. Some of the largest DEFI platforms include sushi exchange and UNISWAP, and DEFI services are almost as important as centralized crypto services. The rise of dispersed communication. Major exchanges like Binance have launched their own DEXs because the demand for them is so high.
Benefits of defi
It is worth noting that DeFi offers some benefits to consumers, which is why it is so popular. First, most Defi platforms are non-monitorized by nature. As the name implies, its decentralized nature means that consumers can trade without giving up ownership of their token. If you use the Defi platform to exchange tokens, you just connect your wallet to it, and not necessarily transfer control of the token. Then comes the privacy factor. The fact that you connect your wallet and don’t set up an account means that almost anyone can access the Defi service without giving up its sensitive information is often a consumer’s focus.
Then there is the issue of efficiency. Most Defi platforms are governed by smart contracts, which means decision-making and transaction processing are not human whimsical. If you have taken a tormented insurance policy in the case of a natural disaster, your funds will be automatically transferred to you once the smart contract confirms that the disaster has occurred. This means not waiting for the months you claim to be dealt with, but just a few minutes. Finally, the Defi platform provides a lot of access to businesses and people, otherwise it will be closed as the mainstream financial system. This is especially true for those seeking loans and insurance.
Blockchain is important
Defi space is worth billions of dollars, as we explain, Becoming more and more popular Internal and external blockchain circles. It is also worth noting that most Defi platforms are supported by Ethereum, Solana and other such chains. Although Bitcoin remains the most popular cryptocurrency on Earth, it is basically unrepresented in the Defi space.
Statista said Ethereum, binary smart chain and Tron continue to dominate Defi. This raises the question of whether the blockchain behind the world’s largest cryptocurrency can find its place in Defi. To answer this question, there are some things that must be considered.
speed
Ultimately, Bitcoin succeeds as a token due to its popularity and value to consumers. As a blockchain, Bitcoin is not the most effective. Defi is working on mainstream use and acceptance, and for this, it will process millions of transactions per day. This means that the DEFI platform must be built by a blockchain known for its speed, which does not include Bitcoin. For comparison, Ethereum is currently Processing of up to 174 transactions per secondAnd the latest announcement from the Ethereum Foundation is aiming to drive speed toward the future of one hundred thousand. On the other hand, Bitcoin can process up to 7 transactions per second, and it is not unheard of for a transaction to take up to one hour of processing.
Needless to say, while Bitcoin may be valuable, its blockchain is simply not designed to handle the speed required in the Defi space. This does not mean that Ethereum itself has been separated from the woods. Other blockchains such as Solana and Tron have also paid huge sums for it in terms of speed, and the term “Ethereum Killer” even appears to describe such networks.
Environmental impact
One of the biggest controversies in the cryptocurrency sector is its impact on the environment. The Bitcoin network alone uses enough energy to power the entire country, which triggers a wave of change within the industry. Ethereum specifically transformed from the proof-of-work consensus currently used by Bitcoin to a comprehensive consensus, reducing its electricity consumption by more than 95%. This makes it attractive for criticizing the energy use of cryptocurrencies and the mainstream of Defi developers.
However, Bitcoin continues to use Proof of Work Consensus, which is No signs of change soon. This means that for Bitcoin to see more uses in the Defi space, it may require huge changes to its underlying blockchain.
start up
All statistics show that Ethereum is years ahead in the Defi space, just like it Other departments like NFT. Bitcoin’s great stride in the Defi space will actually mean that it will steal other users away from other blockchains. Unless something unique is offered, this can be difficult. It’s already at a disadvantage in terms of speed, so existing developers and Defi users may be reluctant to accept it.
Smart contract function
In fact, every Fefi project is powered by smart contracts, meaning they can only be built on blockchains with established smart contract systems. Unfortunately, this is not the case for Bitcoin. Bitcoin has some smart contract features that can decide how to spend tokens, lagging behind Ethereum, Solana, the only smart chain chain, and more. This is fueled by the chicken and egg field. When DeFi was first established, Bitcoin missed the beginning of the head, and therefore, the smart contract functionality within its ecosystem has not yet been developed. And, since the smart contract function has not been determined, it continues to shoot out of the Defi space.
Safety
It is worth noting that it is considered one of the most secure blockchains in the world, and although it is the most obvious and therefore the most targeted attack, security crashes within the ecosystem seem unlikely. This is because Proof of Work consensus means that transactions on the blockchain are manually reviewed and approved. Therefore, a fraudulent transaction approved or anyone who gains control of the network requires a certain amount of manpower and resources, which is unlikely to happen. Ecosystems such as Ethereum and Solana are also very secure, with 51% of attacks being very rare. However, this means that if you do large-scale financial transactions, especially Bitcoin will be a valuable network, especially Given previous security issues.
in conclusion
From all we analyze, it is clear that Bitcoin will struggle to secure a place in the Defi industry, let alone the giant of the current space. Most of this is attributed to Bitcoin as a blockchain that simply does not have the ability to meet Defi’s needs. Although it is very secure and supported by the most famous cryptocurrency on the planet, it is not fast enough to support the level of activity within the Defi space, and its smart contract system is seriously underdeveloped. Then there is the fact that other blockchains have already started before Bitcoin and are unlikely to see a drop in their use. In order for Bitcoin to successfully penetrate into the Defi industry, it may need to change its entire foundation, which is unlikely to happen.
