Is Bitcoin Part of Decentralized Finance?

Decentralized Bitcoin

Bitcoin and decentralized finance (DeFi) are two buzzwords in the blockchain community. Often used synonymously with each other, the two concepts are different from each other. However, these concepts aren’t as different. For starters, both promote decentralized identity and transparency. This raises the question: is Bitcoin part of DeFi? Or the other way around? Or are the two like oil and water? Let’s find out.

What is Decentralized Finance?

Decentralized finance offers a secure financial services system. It is hosted on the public blockchain network: Ethereum. DeFi allows individuals to transact with one another in a peer-to-peer (P2P) network in a secure manner without centralized authorities controlling or managing the transactions.

Though this is a very simplified explanation of the concept. Think of DeFi as an alternate financial services ecosystem that offers most of the services banks provide. This means they make lending, borrowing, trading, taking insurance, and processing flash loans easier.

Besides their decentralized, secure, and quick nature, DeFi is prized since it gives individuals the freedom to connect with another individual and transact with them directly. This eliminates lengthy paperwork, tedious processes, and unnecessary delays. DeFi makes all of this possible through self-executing smart contracts.

Moreover, DeFi also promotes decentralized identity since it is pseudonymous. The best part, though? The ecosystem is available to anyone with a stable internet connection and access to a smart device. Geographic boundaries don’t matter and the entire process is transparent.

What is Bitcoin?

Bitcoin (BTC or BXT) is the first and a leading cryptocurrency. The digital currency facilitates P2P transactions irrespective of an individual’s geographic address. The entire process is secure, transparent, and trustless. Plus, it eliminates the need for centralized authorities and other third parties, helping individuals process their transactions themselves.

Bitcoin isn’t merely a digital currency, though. It’s also a popular investment vehicle, a store of value (like gold), and an easy way for newbies to purchase and begin their crypto journey. In a sense, BTC paved the road for the development of other cryptocurrencies and made people believe in the resilience of the crypto world despite the market’s volatility.

Is Bitcoin a Part of Decentralized Finance?

Yes, Bitcoin is a part of decentralized finance. DeFi offers the ecosystem for crypto holders to carry out transactions in Bitcoin in a same and controlled environment. Think of DeFi as a bank that facilitates transactions and offers other services. On the other hand, Bitcoin can be considered as the fiat currency that makes the world go round.

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