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Opinion: Why DeFi will be bigger than Bitcoin

When most people think of cryptocurrencies, their minds usually drift to Bitcoin. Very few think of decentralised finance, the nascent smart contract-powered space otherwise known as DeFi. That’s perfectly understandable—now 14 years into its lifetime, the world’s top cryptocurrency is also the world’s strongest crypto brand. Bitcoin became the fastest asset in history to top a $1 trillion market value in 2021 and still represents roughly 40% of the global market.

But while Bitcoin is still regarded as crypto’s “King,” it’s not the only important cryptocurrency token. Ethereum, for example, has grown so big that it settles trillions of dollars in value every year.

Arguably the most promising use cases on Ethereum to date have been in the DeFi space. DeFi seeks to create an alternative to the traditional finance system, offering activities like lending and borrowing on decentralised blockchains. DeFi initially took off on Ethereum but has also seen growth on other networks like Solana and Avalanche.

DeFi could usher in a fairer and more equal society.”

While DeFi is yet to realise its full potential, it could offer many benefits over the traditional finance system. It would make things more transparent and accessible, something the finance world lacks today. With DeFi, institutions such as banks could be held accountable for their actions, and regular people could get access to the same opportunities that big finance’s elites benefit from today. 

The advent of DeFi has also led to innovations like stablecoins, a groundbreaking technology that’s already helping people combat hyperinflation in places like Argentina. Like many people working in crypto today, a dream of mine is to use DeFi to improve society and bank as many unbanked people as possible, which is part of the reason token.com launched in Brazil. 

Digital gold and DeFi

Crypto believers often liken Bitcoin to “digital gold,” arguing that the top cryptocurrency could one day top gold’s $11 trillion market capitalization (that would give one Bitcoin a price of about $600,000, about 30 times its current value). 

I can see a world where Bitcoin hits gold’s value, but I think the opportunity for DeFi is much bigger. In terms of numbers, the total value locked in DeFi applications today is about $50 billion, while the global finance system is worth closer to $500 trillion today. If the space captures just a portion of the market, that leaves huge room for growth. But more importantly, DeFi could usher in a fairer and more equal society. 

“I think the opportunity for DeFi is much bigger than it is for Bitcoin.”

DeFi has suffered since it boomed in 2020, but I think that this will change as more people start to see that there is an alternative to today’s system. To help the world discover its potential, we launched a Collection dedicated to “DeFi Blue Chips” like Aave and MakerDAO. Both of these projects are already changing the world and will only see more adoption as crypto increasingly goes mainstream. 

Bitcoin is revolutionary, but it’s not the only exciting technology in the cryptocurrency ecosystem. In fact, I’m much more interested in seeing DeFi succeed. We’re here to change the world for the better, and DeFi will be a huge part of the story. 

Mel Gelderman, CEO of token.com

Read more via CoinTelegraph here.

Please note: Investing in cryptoassets is risky. Due to the volatile nature of the cryptocurrency market, investors run the risk of losing their funds when they make an investment. Returns from cryptoasset investing are not guaranteed, therefore users should always be aware of the risks.

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