How Far Will Cryptocurrency Evolve, And Who'll Rewrite Its Rules?

Seasoned cryptocurrency analysts who have been following the evolution of the market since Satoshi Nakamoto published the original Bitcoin white paper think that the advent of decentralized finance (DeFi) was always bound to happen. Nakamoto addressed this issue tangentially on the white paper, but it was mostly geared towards decentralized and democratic governance of blockchain operations. The need for DeFi side chains was a distant thought at the time.

Ironically, Bitcoin did not give rise to DeFi; it was actually Ethereum, a protocol and blockchain that was not originally intended to focus on currency transactions. We know that the Ethereum network is far superior to Bitcoin, but we never guessed ERC20 tokens would become so numerous and active. With billions of dollars worth of transactions handled each day, the Ethereum network was reaching a major saturation point a few years ago. Had it not been for DeFi projects coming on the scene a few years ago, the Ethereum blockchain would have fallen out of favor with investors.

In 2021, market analysts are projecting that the DeFi space will double in capacity by 2025. This could actually be a conservative estimate. The rise in DeFi activities is not only an indication of the power of the distributed autonomous community, but it also represents a major shift away from legacy financial institutions.

Although DeFi has a long road ahead of it, it seems to be a project that cannot be stopped. Over the past three years, Ethereum’s developer community has not only worked hard to support the platform, but it has also opened the doors for entrepreneurs to leverage their platform. DeFi will continue to mature, grow, and innovate, but it has the potential to be the next big thing in cryptocurrency.

To put the scope of DeFi into perspective, the entire Bitcoin network is built on the idea that users can transact without a third party. The entire blockchain economy has the same ethos, but it works more effectively because it has access to millions of users and institutions. A single network will not be able to handle such a high level of transaction activity, which explains why DeFi is destined to become a new standard.