Bitcoin is making a comeback, in more than just the price. People are looking for ways in which to best utilize their Bitcoin, and Bitcoin DeFi is the latest trend.
While Bitcoin is always looking for ways to enter the markets, including traditional real estate, lending, to simply spending it like cash.
Up until this cycle, answering the question of how do I use my Bitcoin has been met mostly with the store of value argument, and Lightning. But now the winds are blowing in a new direction, and it has a name. That name is Bitcoin DeFi.
So Why Bitcoin DeFi?
So Bitcoin is nearing $100,000 for the second time this week, and people are wondering where this cycle is going with Bitcoin’s price and adoption. The topic of Bitcoin DeFi has finally come to the surface and is turning some ears.
Stacks is paving the way for mainstream adoption of Bitcoin L2s 🟧
Source: Tatiana Koffman, author of Myth of Money, on the Schwab Network – November 25, 2024 pic.twitter.com/jNWErcJGOF
— stacks.btc (@Stacks) November 28, 2024
One contributor to this debate is Stacks, the decentralized blockchain built on top of Bitcoin, to have its transaction finality tied to Bitcoin and enable a Bitcoin economy. Stacks is leading the way with Bitcoin DeFi, or Bitcoin Decentralized Finance.
Stacks has made its way to the forefront of Bitcoin DeFi, particularly with its Nakamoto upgrade and the incoming sBTC upgrade.
Stacks has tackled the immense task of creating a blockchain separate from Bitcoin, that is very interoperable with the Bitcoin layer. Smart contracts on Stacks can thus leverage the Bitcoin network, and assets on Bitcoin.
Coupled with the ability to provide a yield in Bitcoin to Stackers of the network, it’s starting to look like a new financial ecosystem that’s budding into an economy.
What is Bitcoin DeFi?
Bitcoin DeFi is this concept of building decentralized finance infrastructure, particularly to leverage crypto currency assets.
Users that participate in DeFi often gain access to an open, free and fair market that carries both higher risk and higher rewards.
Going forward, users will soon see an uptick in Bitcoin DeFi as the space becomes more attractive to investors, users and businesses that want to leverage Bitcoin’s security, permanence and price action.
Don’t miss out on what’s happing in the Bitcoin L2 space this cycle, as many developments on Bitcoin will gain a global audience supporting it, and very fast.
Many people want to earn Bitcoin yield through a form of staking. Many want to stake their own Bitcoin.
All of this is now possible, though slightly along the risk curve for Bitcoiners who are used to the cold storage method.
But whether you want a loan in stablecoins, backed by your Bitcoin (or other assets like Stacks on Bitcoin), or you want to build financial applications to manage your wealth, it’s all coming.
Why is Bitcoin? Why is Bitcoin DeFi making a splash?
It looks like it’s all coming back to Bitcoin this cycle. All the major apps on Ethereum and Solana are slowly building a version secured to Bitcoin through Stacks. With the Stacks layer making moving Bitcoin from L1 to L2 and back seamless, and the operations with Bitcoin assets more and more prevalent in the future, Bitcoin DeFi is poised to make a splash.
Finally, if you take a look at the direction various countries like The US, who’re now announcing their intentions to introduce a Strategic Bitcoin Reserve, we are now seeing the game theory of the Gold Rush for Bitcoin.
As the new form of money the world will rush to, Bitcoin has clearly become Digital Gold. Not only is it all the properties of money we need, its hash rate has been growing is maintaining its ability to be an open and fair money through this hash rate. As the world moves to a more dominant, fair open Digital Gold, we can begin to secure our digital world’s economy.
As more of the world turns digital, and more capital is turned digital, we’ll need this to protect against debasement. Not only is Bitcoin money, but its network is permanence embodied. And Bitcoin DeFi is coming to enable Bitcoin, empower users with Bitcoin, and build a future on Bitcoin.
