🎧 From Store of Value to DeFi Darling: Bitcoin's Evolution
Round Table Recap: January 27th, 2023
Russian DeFi
April 06, 2023
In this Round Table, we explore the unique features and utility of Bitcoin (BTC) and its potential for participating in decentralized finance (DeFi).
Aki, a former software engineer VC turned entrepreneur, shares his insights on BTC's strengths as a mature and reliable environment with a predictable monetary policy.
He also discusses the challenges of building on BTC and the potential for conditional payments using escrow, as well as his thoughts on the future of institutional activity and the role of wallets in financial transactions.
You can listen to the full audio here
Keep reading 🍿 👇️
Panel
• Guest - Aki Balogh (Twitter: @AkiBalogh)
• Host - Kadeem Clarke (Twitter: @Crypto_Clarke)
Introduction
• Aki was previously a software engineer VC, but he’s been an entrepreneur for 10 years.
• He founded an AI marketing tech company for 18 years called Marketnews, where he worked with scientists to use AI and machine learning to optimize content for SEO and publishers.
• He wanted to step away and build products that help society.
• That led him to crypto 2 years ago, where he delved into products called ‘lock contracts’ that allow BTC to be controlled by smart contracts.
What’s the utility of BTC?
• The obvious leading utility of BTC is that you are without a traditional central bank or single administrator.
Therefore, value can be sent from user to user on the peer-to-peer Bitcoin network without intermediaries.
• Aki mentions the growing divide between BTC OG’s and its people who see its downside, such as its lack of smart contract compatibility.
• Aki highlights how it's not as straightforward to build on BTC as Solidity, for example. The features are less advanced, but the safety side is.
• Aki talks about how countries are starting to adopt BTC on some level, for example, as a store of value.
• Hints to its decentralization with all the power being in the hands of the user.
Aki says if BTC is going to be either a store of value or a method of payment, there needs to be more advanced capabilities on top of that, i.e., lightning network or AvalanceBTCB.
• People want more technical capabilities over BTC without using a central custodian
🎧️ Exploring BTC for App Development:
What's the USP for BTC over ETH
• Aki says how the simplicity of BTC makes it more easily understood by non-technical people. It's easy for governments to understand and use BTC over ETH
Censorship resistance is a use case for BTC.
• The 21 million cap is interesting, and people favor that because of its predictable monetary policy.
• Basically, BTC is a mature environment (you know what you’re getting)
• In the world of crypto, because BTC is the genesis for many other projects, there are a lot of BTC trading pairs, and there’s a significant emphasis on BTC as the first mover and the face of the crypto market; this is of interest to institutions.
• Aki highlights the reliability, brand, and reputation over other cryptocurrencies mainly because other projects are liable to mistakes because of centralization.
🎧️ Exploring differences between BTC and ETH:
In what ways does BTC participate in DeFi right now, and how do you see that expanding in the future?
Aki doesn’t believe building on top of BTC like other chains will work. Mainly because of slow block times and the expressiveness in smart contracts.
• He emphasizes AVAXBTCB as an example of how you can lock your BTC in their system, and they give you a wrapped BTC.
• WBTC to participate in the ETH chain is another example. He says this is the best way BTC can participate in DeFi right now if Bitcoin wants to compete.
• Talks about building on top of BTC or expanding the chain to help roll out use cases beyond just a store of value but is wary that it may involve 3rd party centralization.
🎧️ Exploring Bitcoin 2.0: How can Bitcoin be utilized in DeFi?
What bought you to build on BTC with personal examples?
• Aki talks about his business, DLC link, where he is taking a new approach to wrapping/bridging BTC by locking BTC on the BTC chain on escrow and allowing conditional payments through that escrow.
The ability to conditionally use native BTC while keeping in on the BTC chain and use that BTC in ETH applications in any way using smart contract logic without needing a custodian or a bridge is what his company focuses on.
• That’s key because bridges are challenging to secure because they’re built to transport one address to another. They’re easily hackable, and they need to be reinforced.
• BTC being locked in escrow means it's almost impossible to be hacked.
Why are only a few people building with this type of tech?
• Aki says the tech is very new, and technically the idea has existed for a couple of years but wasn’t usable till taproot was released Nov 2021 because this introduced features that made it feasible.
Aki talks about how taking a loan on BTC requires people to send it to a custodian behind a lender.
• You cannot use your BTC without sending it to a centralized entity which kind of defeats the purpose of BTC in a sense, and this is what his business is trying to solve.
• Aki talks about having a credit market on Bitcoin without relying on custodians in the future, decentralizing the process the whole way through.
What are your thoughts on institutional activity?
• Aki says that institutions will naturally get pulled along as long as they believe in what BTC represents.
• He believes that wallets will become much more powerful, not just a place to hold tokens but also to perform most of your financial transactions. I.e., take a loan right from the wallet using your BTC.
• Future systems where a lot of your financial transactions will be from your wallet, and you don’t have to be subject to bad financial decisions from bad companies.
🎧️ Exploring institutional attitudes towards BTC: