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Lenard A few weeks ago a Coin Desk headline, "Why Hardnosed Bit coiners Can Learn to Love DeFi,” caught my eye. The title was designed for controversy. Decentralized finance (DeFi) seems to be everything Bit coiners reject: useless tokens created for haphazard projects and quick money-grabs driven by ponzinomics. All of this happening on Ethereum, Bitcoin’s unprincipled competitor.
Yet, to dismiss the piece, and its author Matt Luongo, would be a mistake. Matt is an ardent Bit coiner making an argument that to me seems obvious. As a long-time Bit coiner, it has always been my dream to extend Bitcoin’s decentralization to the wider economy. That is precisely what Matt is saying: It is time for us to take our belief in decentralization to the next level.
Edan Yago is a contributor to Sovryn and founder of Cement DAO. Sovryn is a decentralized bitcoin trading and lending platform. Cement DAO is a decentralized tool to unite the fragmented stable coin ecosystem.
We already have a decentralized currency; now we should decentralize the services through which we use that currency. I disagree, however, with Matt’s proposed solution.
The same day Matt’s article came out, we learned BitMEX, where so many Bitcoiners have deposited their bitcoin, is under threat. Not only does this place users’ bitcoin and private information in jeopardy, but it also threatens the availability of a type of financial service that many Bit coiners have found useful.
Over time, all BitMEX-type services will find themselves under pressure to become regulated. They will demand users dox themselves through know-your-customer (KYC) rules. They will continue to become centralized chokepoints in the Bitcoin economy where authorities can exert pressure, control, and extend their tentacles of surveillance. This is not how we build an unconsumable, permissionless economy around bitcoin. We need an alternative.
If we want to extend Bitcoin’s ethos of freedom and self-sovereignty beyond just holding, then bitcoin services must become decentralized. That’s what DeFi is. The bottom line, nobody should be paying more attention and be more supportive of DeFi than Bit coiners.