B.Itcoin enthusiast and Twitter CEO Jack Dorsey recently put his mobile payments company Square at the center of one of the most talked about innovation areas in finance. Last Thursday, Dorsey announced on Twitter that it was launching a decentralized financial platform (DeFi) for developers to create projects based on Bitcoin (BTC).
Square plans to ride the fourth crypto wave
Dorsey, who says he would be working on Bitcoin if he didn’t work at Twitter and Square, announced that he plans to start a “new company” with the “goal of creating non-custodial, license-free.” and to simplify decentralized finance ”. Services.”
Dorsey tweeted, “Our main focus is on #Bitcoin. His name is TBD. “
The latest announcement came after Dorsey confirmed that his fintech company was working on a Bitcoin hardware wallet.
The DeFi market size has grown from less than $ 1 billion at the start of the pandemic year to an all-time high of $ 87 billion in May this year.
DeFi’s so-called fourth crypto wave has attracted a lot of capital over the past year and is showing little sign of slowing. At its core, it promises a technology that will end the role of mediators in the financial system. The first crypto wave was Bitcoin innovation, followed by Ethereum (ETH) and the first coin offering boom in 2017.
Why is Squares Entry into DeFi Markets Gaining Popularity?
DeFi has already attracted a significant amount of capital in the last year alone, but Square’s involvement could completely transform the DeFi market.
In an act of rare innovation for an established financial services company, Square is looking to build a DeFi platform based on Bitcoin instead of Ethereum smart contracts or other DeFi-enabled blockchain cryptocurrencies.
The lack of smart contract capability, the main component of dApps, has made it difficult for Bitcoin to compete with Ethereum for developers.
Currently, the de facto crypto leader’s network does not support smart contracts. Still, Square’s strategy of building a DeFi platform on the Bitcoin network could lead to fierce competition among the leading cryptocurrencies.
The upcoming Bitcoin upgrade, the first in four years, is slated to take effect in November. Also known as Taproot, the upgrade could support Dorsey’s plan to offer DeFi stores on the Bitcoin network. Along with greater transaction efficiency and privacy, the upgrade will unlock the potential for smart contracts like what Square is building.
“The most important thing for Taproot is … smart contracts,” said Fred Thiel, CEO of cryptocurrency mining specialist Marathon Digital Holdings. “It is already the most important driver of innovation in the Ethereum network. Smart contracts essentially give you the ability to really build applications and companies on top of the blockchain. “
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