When you mention DeFi, one of the first concepts that get to people is the Ethereum blockchain. The Ethereum network was the first crypto project that started the whole concept of smart contracts and decentralized finance.
Until much later, other blockchain networks like Solana ventured into the same DeFi. But that's by the way. Bitcoin joining the list of cryptocurrencies operating under DeFi seems out of place.
At least, until now, the apex cryptocurrency has always been seen as a store of value. But recently, the Ordinals have made many start changing their minds about the potential of Bitcoin. Maybe, just maybe, it can actually venture full-time into DeFi. But at what cost?
The challenge with Bitcoin's integration into decentralized finance does not stem from its compatibility. Bitcoin was designed as a decentralized currency with the intention of breaking away from traditional financial institutions and government control. The main obstacle to Bitcoin's adoption in the decentralized finance industry is the acceptance of the cryptocurrency by the public.
The co-creator of Stacks and CEO of Trust Machines, Muneeb Ali, thinks otherwise, and he made his thoughts known while speaking with Blockworks in a podcast interview. While speaking on the 0xResearch podcast about the "Bitcoin thesis," Ali thinks that everything happening in the decentralized sector would eventually come to Bitcoin.
The Bitcoin thesis is a long-standing argument between Bitcoin loyalists that any useful application on another chain will eventually come to the apex cryptocurrency. Ali says that any application (including DeFi) that finds its way to Bitcoin would only become valuable. His reason was "because they will benefit from the security of Bitcoin, the durability of Bitcoin, but above all, the liquidity of Bitcoin."
People Opening Up to More Bitcoin Use Cases
Many crypto enthusiasts are opening up to different potentials of Bitcoin, unlike before, and it can be traced to certain events. Right time, the concept that stuck with Bitcoin the most was that it was a store of value. That is true, but not many Bitcoin enthusiasts prefer to see other use cases of the cryptocurrency other than as a store of value. Muneeb Ali thinks that the success of the Bitcoin Ordinals was very important.
"This year, with Ordinals and more recently with BRC-20, part of the thesis is actually coming true," Ali said.
Muneeb Ali used the case of Bitcoin NFTs many years back when many thought that the idea of having NFTs in the Bitcoin blockchain was impossible. "Bitcoin is now number two in terms of trading volumes of NFTs. And Solana is number three. Six months ago, this would be unimaginable. Bitcoin was not even on the map," he said.
Bitcoin Use Cases Stagnant Due to Lack Of Infrastructure and Not Interest
According to Muneeb, the challenge facing Bitcoin's entrance into the DeFi space is not a lack of interest from people. Rather, the main issue is the insufficient infrastructure and limited number of developers that are required to make it happen. Muneeb highlights that the absence of necessary tooling, wallets, and a robust developer community is a major obstacle that Bitcoin needs to overcome to successfully venture into DeFi.
When these infrastructures are made available, users' interest won't be a problem. Like the case of NFTs, many Bitcoin enthusiasts might actually accept the idea of venturing fully into the DeFi space.