The DE-FI space has started to pose many questions by bringing traditional finance products to the blockchain, and we see significant yields at the time. Since DE-FI sees investors go pretty far out on the yield curve, we see substantial returns, but as the market matures, we’ll see the yield curve flatten and the need for more productive use of collateral in the system.
What I see in the ETH chains current boom is the birth of banking and financial tools on the blockchain for retail investors. As Bitcoin continues to improve in value, we will need new ways to leverage that collateral to do things.
Bitcoin can act as a financial backstop for companies to borrow against and for individual investors to leverage their savings as an asset. The same way real estate owners leverage homes to gain a rental income or use it to borrow against, I think Bitcoin will be that for the crypto world.
The gold standard of crypto
Many people think that Bitcoin is money; in a sense, anything that holds value is money, but I often hear the idea of you know you can buy coffee with your Bitcoin, that’s the end goal, a medium of exchange and yes that can be a possibility.
However, do you want to spend your good money regularly? Do you see gold owners spend their gold on coffee? No, they spend bad money and save good money.
Unless the lightning network becomes a hit and we can spend Sats affordably, I can’t see people wanting to use it as a way to pay for things but more a way to protect their purchasing power and, when NEEDED, to liquidate to fiat or collateralise their position to get fiat.
Merging fin 1.0 with fin 2.0
As Bitcoin continues to become an exciting prospect to fintech 1, we could see banks and financial institutions wanting to get their hands on this pristine collateral. The provable scarcity, however, means, if they are not going to get into the mining space and earn their own, they need to ask owners to provide ours as collateral.
Naturally, no HODL’r is going to want to do that unless they’re getting a steep premium for doing so, and I’m sure we’ll see interest rates for custodial being far higher than non-custodial borrowing.
To many, the end goal is still to cash out and have fiat and live their life without the need for Bitcoin, and if that happens for you, that s great. To me, I want to see a world where I can put my BTC to work for me every day and build wealth slowly but surely.
The end goal for me is never to HAVE to sell, but to own something so valuable others would pay me to use it for their business, the same way we see Celeisus Network and BlockFI do today.
