The Australian Times ran an article on how cryptos have evolved and why DeFi may be the next big thing in finance
Mainstream media is increasingly talking about crypto in a positive light. In a recent write-up, the Australian Times hashed out the differences between Bitcoin and Ethereum. The impetus for this interest appears to be Decentralised Finance (DeFi) and the numerous tools being developed for the Ethereum blockchain.
Even though Bitcoin was released to the public as the first cryptocurrency in 2009, Ethereum has been able to pull away from it in the area of DeFi.
The creation of Ethereum in 2014 was clearly inspired by Bitcoin, as Ethereum uses the blockchain structure of Bitcoin and then built the capacity for more complex tools.
Ethereum may overtake Bitcoin in the wider market
Ethereum was made to overcome and improve many hurdles of blockchain 1.0. One was the commercialisation of “smart contracts,” a digital self-executing contract, that once limited for the use of blockchain developers.
Smart contracts are easily accessible and have been used to create Decentralized Autonomous Organizations (DAOs). They were designed to be a form of digital venture capital fund that is accessible to the general public without needing a human to operate the system, thereby reducing high service fees.
Unlike a traditional fund, the decentralized platform has no singular owner or manager. It places the decision-making power into the hands of its investors in the form of a token called Ether – investment decisions are made based on majority voting.
DAO wasn’t perfect
By May 2016, up to 14% of Ether was held by DAOs. During this time, a potential system vulnerability in its governance structure was found and investors were warned.
Not long after, this vulnerability was exploited through a series of cyberattacks which siphoned off 3.6 million ETH, or $7.5 Million. This sparked controversy with DEO investors; with some fighting for the recovery of DEO and some calls for its disbandment.
When DAO was introduced, investors were sure that through blockchain cryptography, it was impenetrable and hack-proof, but this wasn’t the case. Despite the DAO debacle, DeFi development is expanding globally.
The road to the current state of the decentralised economy has been rocky at times, but it appears that DeFi has become popular enough to gain the attention of established media outlets. This could lead to wider adoption in the future as more people understand the capabilities that cryptos and DeFi have to offer.