Vitalik Buterin, the co-founder of Ethereum, does not usually hold back the criticisms related to the future of cryptocurrencies. On this occasion, the engineer behind the most important blockchain in the world has questioned the plans of the CEO of Square Inc, Jack Dorsey, to promote the development of decentralized financial servicess (DeFi) within the Bitcoin blockchain.
In an interview with Bloomberg, Vitalik Buterin said that Bitcoin, unlike Ethereum, does not have the capacity essential of providing decentralized financial solutions such as smart contracts, so if Dorsey wants to persist in his idea, he will have to build his own system that offers this type of functionality, something that could decrease the trust of users.
“I am skeptical about decentralized finance built on the Bitcoin network. Ethereum, for example, has built-in functionality, like smart contracts, that supports DeFi compliance. However, the first cryptocurrency does not have this set of characteristics, which means that Dorsey will have to build a new system. Even if you can do it, the confidence level will be very weak“, said.
Buterin’s remarks come shortly after Twitter co-founder Jack Dorsey announced that his transactions and payments company, Square, Inc., was going to develop TDB, a platform to offer “non-custodial, permissionless and decentralized financial services based primarily on the Bitcoin blockchain, the world’s most widely used cryptocurrency.
Dorsey’s new project with its Bitcoin-based TDB could become direct competition to Ethereum-based DeFi. However, the first, as Buterin mentions in the interview with Bloomberg, relies on additional infrastructure such as chains and bridges to sustain smart contracts and other decentralized financial services.
DeFi, the point of conflict between the proponents of Ethereum and Bitcoin
In the world of finance, no longer only centralized financial services reign, controlled by governments and financial organizations. With the rise of cryptocurrencies, decentralized systems have emerged that allow you to operate safely and without intermediaries.
This is where the DeFi game comes in, a blockchain-based trend, like Ethereum’s, which allows you to run applications to manage digital assets. These programs are known as smart contracts and decentralized applications. One of their advantages is that anyone can create them and, since they are modular, they can be stacked to create a complex system that interacts with each other.
The possibilities of DeFi are very wide. For example, when borrowing money for a project, instead of going to a bank, people will be able to access a DeFi platform and, meeting a series of conditions, request a loan. In other words, it will not be necessary to be banked to carry out a large number of financial operations that until recently were limited to traditional systems.