In an interview with Bloomberg, Ethereum co-founder Vitalik Buterin discussed the widescale adoption of Ethereum. He believes that decentralized finance, or DeFi, could be the use case that gets it there. And while most DeFi apps are built on Ethereum, the network could soon have some hefty competition.
That’s because tech billionaire Jack Dorsey also recognizes the potential in DeFi. He is trying to build a similar ecosystem using bitcoin instead of Ethereum. Buterin, however, is not sold, saying,
“I”m skeptical about decentralized finance on top of bitcoin projects.”
Smart Contracts Make the Difference
Buterin went on to draw distinctions between the Ethereum blockchain and bitcoin. For instance, Ethereum’s “native functionality” supports smart contracts, which dictate how and when digital assets are released in an agreement. He argues, “Bitcoin doesn’t have the same functionality to the same extent,” adding that Dorsey will have to “create his own system that enforces those rules.”
The way that Buterin sees it unfolding is that the “bitcoins will have to probably be owned by a multi-sig wallet controlled by either Jack” or “other participants in the system.” While the end result might resemble Ethereum, Buterin says that it will “end up being something with a much weaker trust model.”
Square is creating a new business (joining Seller, Cash App, & Tidal) focused on building an open developer platform with the sole goal of making it easy to create non-custodial, permissionless, and decentralized financial services. Our primary focus is #Bitcoin. Its name is TBD.
— jack⚡️ (@jack) July 15, 2021
Buterin went on to say that he believes Ethereum could pose a threat to centralized platforms such as Facebook and Twitter. He quickly added, however, that “it can also be an opportunity,” pointing to Jack Dorsey’s decentralized social network project called Bluesky as an example.
Buterin explained how the future of the blockchain could include accounts that evolve from just holding funds to “fully blown profiles” where there will be an intersection of social and finance that leads to “something big.”
Ethereum has been on a bull run this year, fueled largely by the rise of DeFi apps. So far in 2021, the Ether price has established a new peak of more than USD 4K, though it is currently trading off those levels at USD 3,236.
According to Buterin, not all DeFi projects have shown their mettle. While some projects are clearly extremely valuable, others could prove to be overhyped.