At first Satoshi created bitcoin and he said, “Let there be blockchain,” and there was blockchain.
Ten years is an era of technology and a lot has changed in the cryptocurrency world since the start of the Bitcoin network. From a Cambrian-style altcoin explosion to smart contracts and decentralized finance, innovations in the chain have made Bitcoin look old-fashioned.
Back to Bitcoin
Ironically, during the bull market, when the price of Bitcoin reached record highs, it lagged behind the rest of the market. If you bought Bitcoin in early 2017 or early 2020, you will definitely make money on your investment, but buying other native protocol tokens like ETH, BNB, and ADA will earn you more. Instead, Bitcoin stood out from the competition as the market began to cool and bearish conditions re-emerged. With triple-digit gains from altcoins draining almost as fast as they’ve been accumulated, there’s been a flight to quality assets, with Bitcoin, Ethereum and, of course, stablecoins the biggest gainers.
Lorraine Stefanie, partner at Pantera Capital noted, “When there’s a bear market, there’s usually an emotion-driven risk aversion, and cryptocurrencies are no exception. Bitcoin is the longest-held decentralized digital asset and many believe it’s a safer store of value.”
However, the period when Bitcoin started experiencing serious volatility was after the market had bottomed out and the long, slow road to recovery had begun. As BTC enters its accumulation phase, eyes are once again on the crypto-asset that started it all, with a renewed focus on building an ecosystem of products to expand Bitcoin’s utility and ultimately its market dominance.
In 2013, Bitcoin’s dominance (as a percentage of the total cryptocurrency market capitalization) was 95%. By the end of 2017, that number had dropped to 32 percent, and today it is 42 percent.
Building on the Base Layer
Over the past five years, hundreds of millions of dollars have been invested in building the base layer of bitcoin. Projects such as Lightning Network and RSK have attempted to extend bitcoin’s functionality by creating sub-tiers that support subtokens, smart contracts, and microtransactions. The goal is to leverage the unprecedented security of bitcoin to create decentralized financial products based on the most liquid and reliable crypto network.
Meanwhile, the Portal is building a full-fledged DEX and self-hosted wallet as a layer on top of the Bitcoin network. It aims to fulfill everyone’s commitment to autonomy by providing DeFi services such as asset issuance, swaps, collateral, liquidity, derivatives, etc., while maintaining Bitcoin’s strong security.
Assessing the connection between Bitcoin and DeFi, Stephanie highlighted the differences, saying, “Bitcoin is seen as a store of value, especially when you look at it compared to most other assets in this space versus volatility. DeFi has access to a variety of modular financial primitives. e.g. global lending and trade.”
Stephanian believes DeFi has not taken off over Bitcoin, saying, “The Bitcoin ecosystem doesn’t provide the same developer tools and standards that the other layers provide.
What Might A DeFi-enabled Bitcoin Resemble?
A recent report commissioned by Trust Machines, “Bitcoin: Beyond the Base Layer,” outlines this vision. Its authors acknowledged that scaling Bitcoin’s utility is a “multifaceted effort” that requires additional funding and development to match the experience of developers and users of EVM chains like Ethereum.
Trust Machines intends to use Bitcoin as the final solution layer for applications built using Stacks, the Bitcoin programming layer. The idea of trading NFTs on a network connected to Bitcoin may seem novel, but with a proof of concept, the number of equity-based smart contracts is in the thousands. However, the report notes, developers will find it easier to simulate Solidity contracts on EVM chains than to code them from scratch using Stacks’ Clarity programming language.
Dan Held, ex-CEO of Kraken, is one of the first DeFi acquisitions in Bitcoin history. Now, with Trust Machines, Bitcoin proponents are reinventing the original cryptocurrency as a playground for decentralized finance, dismissing the doubters and saying “there will be a renaissance in Bitcoin DeFi.” -world. Currently, DeFi is not synonymous with Bitcoin and most people believe that the two words do not really match.
Bitcoin based case
The principal researcher of DeFiChain, U-Zyn Chua, believes that EVM is suitable for experimentation, especially the new DeFi protocol. The DeFi of Bitcoin. That’s it: scale up to consensus level with mature EVM-based DeFi.
Due to the collapse of UST, Terra’s fixed local stake, LUNA, the promised local cryptocurrency, was transferred to zero. Within days, billions of people disappeared from the cryptocurrency market and thousands of cryptocurrency holders lost their savings. Fallout killed the Celsius cryptocurrency storage platform and had the effect of shutting down BlockFi and Voyager.
Despite the lack of originality in many post-Ethereum blockchains, these networks experienced rapid growth during the bull market, peaking in late 2021. Metrics such as total value locked, local token price, and number of wallets hit all-time highs last year with networks like Harmony, Avalanche, and Terra. After that, the market began to fall, revealing the potential flaws of the multi-chain model.
The collapse of Terra’s local stablecoin, UST, drove its hedged cryptocurrency LUNA to zero. Billions of dollars disappeared from the cryptocurrency market in a matter of days, and thousands of cryptocurrency holders lost their life savings. The fallout created a domino effect that also wiped out cryptocurrency savings platform Celsius and weakened BlockFi and Voyager.
With the hack of two major blockchain bridges stealing nearly $1 billion from the Ronin and Harmony One ecosystems, the multi-chain thesis was quickly withdrawn. High-speed, low-security chains don’t look so attractive anymore – and neither do algorithmic stablecoins. The Great Crypto Crash of 2022 Reveals Vulnerabilities in Centralized and Decentralized Platforms and Protocols. But underneath it all, one thing lived up to the promise, and that was Bitcoin. Will the networks driving the next wave of DeFi innovation remain hidden?
A trillion dollar chance
So far, no one has completely cracked the concept of “Bitcoin with bubbles”. An ecosystem that sings and dances, anchored in the consensus of BTC’s Proof-of-Work and unprecedented decentralization, remains a utopia for now. This doesn’t stop his Imagineers from dreaming big. Like the mythical city of El Dorado, there is a digital gold metropolis just out of reach of the maximalists who believe that all roads lead to Bitcoin.
Described as a trillion dollar opportunity, Bitcoin DeFi’s outlook remains interesting.
Imagine how powerful Bitcoin could become if more developers were actively involved in its ecosystem,” thought Hiro, creator of the Stacks development tool, “the capital is already in the ecosystem. The earliest adopters of cryptocurrency were Bitcoin… Building attractive Bitcoin projects in DeFi, NFT, DAO and other Web3 applications provides a new source of wealth hidden in Bitcoin. ”
Bitcoin may be the most powerful decentralized network in the world, but does that make it the best candidate for deploying decentralized finance? Bear markets are meant to build and the crypto community is known to be responsible, and right now all eyes are on The Merge. When the market recovers and starts to top out in 2021, we will know if DeFi and Bitcoin have a future together or if they are destined to drift apart forever.
