How did we get from Bitcoin to DeFi and NFTs?
DeFi, Investing - February 24, 2021
Bitcoin has come a long way since 2008. One of its most important developments is decentralized finance or DeFi. But how did we get here? In this video, we breakdown the journey from BTC to DeFi and the difference between the two.
But before we jump straight into Bitcoin and DeFi we have to explain how the transfer of money works. Prior to Bitcoin, people transferred money through banks. This required banks to custody, verify and transfer the money. A simple transaction, because of the drawn out process, took several days. Not to mention the fees and friction.
Bitcoin changed this. Through Bitcoin, not only is the transfer of money quicker, but it happens in a decentralized manner. This means that there is no third party like a bank or a government involved.
What Bitcoin began, DeFi is taking forward. DeFi is building a whole architecture of financial solutions on top of Bitcoin’s decentralized transfer of value model. The solutions of lending, borrowing, insurance, real world assets’ investments and more are being built on DeFi. This is an important step in the development of the cryptocurrency space.
The network which began this transition from Bitcoin to DeFi is – Ethereum. The native cryptocurrency of Ethereum – Ether is the second largest cryptocurrency in the world by market capitalization. This is where DeFi was started. But now there are a whole host of other similar blockchains in the world.
DeFi on Ethereum is building a new financial ecosystem. This is being built on top of what Bitcoin created. But DeFi’s value is more than just a digital asset or cryptocurrency. Its aims to build all forms of financial transactions within a decentralized framework, using currencies that are not linked to governments.
This evolution from Bitcoin to DeFi is also being built on smart contracts, oracles, synethic assets, and non-fungible tokens or NFT. These innovations will increase the value that the decentralized world can give to the traditional financial world. What birthed this is Bitcoin, but what will take it forward will be DeFi.
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