Bitcoin came into existence in 2009 as an open-source project with the aim to democratize financial transactions. The cryptocurrency is often described as the ‘Ethereum of money’ due to its popularity among developers who build applications relating to financial technologies.
The demand for Ethereum-based financial applications — often referred to as ‘decentralized finance’ — is predicted to grow from 2020 to 2025, reaching $2.2 billion in 2022.
Along with the mainstream media, most people have heard of Bitcoin. They may know that it’s a form of digital currency or that it has the potential to be used for illegal activities (such as purchasing narcotics and weapons or paying for hacks). However, many do not know how Bitcoin works or why it was created.
In this article, we will discuss what many are ‘betting’ on with Bitcoin and how you can play the game.
The Rise Of Decentralized Finance
For centuries, finance has been dominated by large financial institutions and central banks. The financial system was designed with the need to preserve financial stability in mind, leading to a ‘top-down’ approach in which authority is concentrated at the high end.
In the last few years, this has begun to change. We are now seeing the rise of ‘bottom-up’ or ‘decentralized’ finance, where the power is distributed to individuals and institutions rather than concentrated in a few hands.
This trend is being driven by developments in technology that enable instant and peer-to-peer transfers of large sums of money. Bitcoin and other cryptocurrency enable value exchange and record-keeping without requiring a central authority. This, in turn, enables individuals to take part in the financial system and benefit from its operation, while protecting their privacy.
Developers are already working on alternative implementations of the Bitcoin protocol that will further decentralize finance. For example, the Binance Chain (formerly known as Neuwber) incorporates many features to make transactions private and secure, including stealth addresses, ring confidential transactions and timestamps.
These developments will continue in the next few years as more people gain confidence in the crypto space.
Why Are Developers Creating Apps For Bitcoin?
With many applications available for download, it’s easy to see why so many individuals are interested in developing applications for Bitcoin. You can build anything you imagine on the blockchain, and it’s free for developers to do so.
Even in its early days, Bitcoin enabled individuals to build real applications that solved everyday problems. Some of the most popular applications include:
- Coinbase, which is an integrated platform for buying, selling and storing cryptocurrency
- Mycelium, which is a Bitcoin-themed private mobile phone operating system
- Electrum, which is a Bitcoin wallet that is both private and secure
- Lumee, which is a hardware wallet that stores multiple currencies and enables users to engage with the blockchain
- Bitcoin Fog, which provides a simple and secure way to send and receive payments
- Toshi, which is a browser for the Bitcoin blockchain
- BlockExplorer, which provides a visual interface for searching and exploring the blockchain
Since its inception, many developers have worked tirelessly to make Bitcoin better and more user-friendly. With every new version of the software, the limitations are gradually being removed. Today, Bitcoin is a versatile, cutting-edge technology that can be used for many different applications.