Tag: Bitcoin

Taproot has enhanced Bitcoin’s competitiveness by introducing new features like smart contracts and decentralised finance (DeFi). This gave rise to BTCFi. What is it all about?

The Taproot update in 2021 enhanced Bitcoin’s competitiveness by improving its efficiency and privacy while enabling features previously outside its protocol, such as smart contracts and decentralised finance (DeFi). Since then, significant progress has been made, leading us to the concept of BTCFi (Bitcoin + DeFi). What does this entail?

DeFi: Finance for all

DeFi, the synthesis of Decentralised finance and Finance, is a universe of financial services that aims to exclude traditional intermediaries—typical of centralised finance—and their associated costs. This is possible because DeFi is built on blockchain and works thanks to smart contracts, self-executing digital agreements written in code and registered on a blockchain. These contracts are automatically activated without intermediaries when predefined conditions occur. 

We have been discussing decentralised finance since 2015, when Ethereum launched smart contracts, which are fundamental to its functioning. This article provides everything you need to learn more about this topic.

Today, the total TVL (Total Value Locked, an indicator that measures the total value of assets deposited in a decentralised finance protocol) in DeFi is around $90 billion, and more than 50 per cent of it is locked up in Ethereum. However, something has changed in recent months.

Taproot: Let the DeFi on BTC begin!

The Taproot update is considered a significant upgrade for the Bitcoin network. It increases its efficiency and privacy and, above all, extends the capabilities of smart contracts. Two main functions, the MAST and Schnorr signatures and Tapscript, Bitcoin’s programming language update, make this possible. We have discussed this in detail here.

Taproot has enabled new possibilities for programmability and privacy within the protocol. These changes naturally also affect Bitcoin, which is gaining use cases. 

Bitcoin dominates the market but is little exploited in DeFi.

As is well known, BTC represents about 63% of the crypto world’s total market cap, with a value of about USD 1.6 trillion. However, due to the incompatibility between its blockchain and Ethereum, it is tricky for holders to find a secure solution to profit from the asset held. Of course, some ways, such as wrapping and bridging, allow Bitcoin to be ‘transferred’ from its native blockchain to other chains, such as Ethereum.

Wrapping and bridging: risky solutions

The main problem is the security of the transactions, as one is exposed to the risks of the entities involved in these processes: merchants, custody services, and bridges could be subject to attacks and exploits, in addition to the inherent risk of the individual platforms operating in DeFi. However, the main deterrent is only one: Usually, those who hold Bitcoin do not want to part with it for any reason, and these transactions necessarily go through custodial wallets. 

Hence, there is a need to implement something that meets these demands: DeFi on Bitcoin or BTCFi.

What is Bitcoin DeFi?

BTCFi is an ecosystem of decentralised applications (DApps) of a financial nature built on Bitcoin. As simple as this may seem to be a definition, it carries complex consequences, especially if one relates it to the ‘old’ ways of using BTC in DeFi. The main differences:

• Network: In Ethereum’s DeFi ecosystem, one has to use WBTC to trade, exposing oneself to the risks we saw earlier. On BTCFi, transactions are processed directly with BTC.
• Security: Unlike wrapping BTC, which requires trusting the custodian, merchant, bridge, DeFi platforms, and underlying infrastructure, BTCFi is based on Bitcoin’s blockchain, which is unique regarding security and decentralisation.
• Usage: While WBTC on Ethereum (or other chains) is mainly used as collateral or a medium of exchange in DEX, BTCFi potentially opens up all the use cases of traditional DeFi, as we will see below.
• Custodianship: While wrapped, Bitcoin is held by a custodian such as BitGo, a centralised entity. BTCFi is natively non-custodial, as it is managed exclusively by decentralised protocols.

The advantages of a native DeFi on Bitcoin are apparent, and Bitcoiners seem to have understood this well. Defillama’s graphs speak for themselves: since April 2024, the TVL on the Bitcoin chain has increased from $490 million to $5 billion, equivalent to 63,000 Bitcoins. 

At the moment, the protocols that have catalysed the most BTC are Babylon, Lombard, and Solv Protocol. The first of the three dominates the ranking, with almost 4 billion (out of 5) Bitcoins on the chain. Lombard and Solv Protocol follow.

BTCFi: How to use it?

As we mentioned, Toot Bitcoin has use cases similar to traditional Bitcoin. The difference is that it is built and developed on the native blockchain without wrapping or bridging. Look at some practical use cases introduced by BTC’s native blockchain protocols.

Staking with Babylon

Babylon, for instance, allows BTC to be put on lockdown on the Bitcoin network to guarantee and actively participate in the security of other Proof-of-Stake networks. This mechanism, which has long been popular on the Ethereum mainnet, is called restaking. In this case, it uses the computing power dedicated to mining BTC by indirectly transferring it onto proof-of-stake networks. All this happens without the user being aware of it, since it is as if he receives rewards by staking his BTC, while on the opposite side, Proof-of-Stake blockchains can exploit locked Bitcoins to improve their systemic security. 

Liquid staking with Lombard and LBTC

Lombard also offers a similar service with an extra feature: liquid staking. Once one’s BTC is locked up, one can mine LBTC, an asset collateralised 1:1 with Bitcoin, to generate additional income. Due to its cross-chain nature, it is possible to use LBTC ‘around’ DeFi, as collateral for lending and borrowing, or even to provide liquidity to DEX. In short, LBTC is the equivalent of stETH for BTCFi.

Solv Protocol: towards unified liquidity

Finally, Solv Protocol, which offers restaking services, issues a version of BTC called SolvBTC. This represents an interesting attempt at BTC wrapping because it aims to solve the problem of Bitcoin’s fragmented liquidity: the various wrapped versions of BTC – WBTC, BTCB, BTC.b, etc. – are chain-specific and have little cross-chain interoperability, resulting in de facto ‘siloed’ Bitcoin. – The various wrapped versions of BTC – WBTC, BTCB, BTC.b, etc. – are chain-specific and have little cross-chain interoperability, being in fact ‘siloed. ‘ 

SolvBTC aims to unify Bitcoin’s liquidity across multiple chains as a universal BTC pool for DeFi’s users. This will allow for more agile asset use across different protocols. 

Advanced liquid staking: SolvBTC.LSTs

In addition, Solv Protocol, like Lombard, also has liquid staking functionality since you get SolvBTC by blocking SolvBTC.LSTs (SolvBTC Liquid Staking Tokens) in return. These, in turn, are divided into Pegged LSTs, which are pegged 1:1 to the value of Bitcoin, and Yield-Bearing LSTs, which grow in value over time because the revenue gained from the stake is automatically reinvested in the token.

We are only at the beginning of BTCFi

As you may have guessed, this is a newly developing world with infinite return opportunities: using your Bitcoins in DeFi while maintaining custody, without necessarily having to use WBTC, was a long-overdue possibility. If you want to be part of the change affecting BTC and DeFi on BTC, click below!

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The Bitcoin Policy Institute has proposed Bitcoin bonds, an innovative financial instrument that guarantees good returns without risk. Learn more about it.

Bonds based on Bitcoin may soon become a reality. The Trump administration’s favourable stance towards cryptocurrency is evident and has been demonstrated at various times, particularly with the approval of government reserves in Bitcoin.

Recently, however, discussions have emerged regarding an innovative financial development: a new method for integrating Bitcoin into the global financial system. Could BTC potentially serve as one of the pillars supporting U.S. debt through “Bit Bonds”? How do these instruments work?

US debt rises and worries.

The proposal to introduce Bitcoin-backed bonds has emerged in response to the growing US public debt, which has steadily increased relative to the GDP since the pandemic began. Naturally, when a problem becomes acute, the search for solutions accelerates. In this case, that could lead to the launch of Bitcoin-backed bonds.

Bitcoin does not fully collateralise these bonds; ​​they are financial instruments that include a strategic allocation to cryptocurrencies. The fundamental concept is quite ambitious, so we find it appealing. The idea is to enhance virtually risk-free financial instruments with a digital commodity, creating a net benefit for both governments and investors.

How Bit Bonds Work

Bit Bonds function similarly to traditional US government bonds. They are essentially Treasuries—debt securities issued by states to raise funds at a lower interest rate (coupon rate) than the market average. The yield on these financial instruments is lower not because they are inefficient but because a market segment that accommodates Bitcoin must be created.

The interest—or yield—is lower because part of the money raised through these bonds is invested in Bitcoin. As Bitcoin’s value increases, it could positively impact the bonds’ interest.

As you can see, the theoretical framework for how Bit Bonds work is straightforward and advantageous for both parties involved: the state and the investors. Since the rate associated with these bonds is lower, the state saves billions of dollars in interest payments on debt. At the same time, investors gain indirect exposure to Bitcoin (BTC), an asset historically appreciated over the long term.

Why are they not risky financial instruments?

The most interesting thing about Bitcoin bonds is that they are not risky. Rather, they have the same degree of risk as government bonds. How is this possible? The price of Bitcoin does not always rise, so there must be some risk associated with it.

False! Every time a new Bit Bond is issued, a small part of the capital raised is used to buy Bitcoin, which is then locked in a separate pool. At the bond’s maturity, you receive back all the initial capital (principal), just like when you buy a normal bond. In addition, if the price of BTC has increased, you will receive an extra payment proportional to the increase. 

This means that your investment is unpacked in two: a fixed tranche (typical of government bonds) and a variable tranche that follows the price trend of Bitcoin. Similar instruments such as TIPS (inflation-linked bonds) or gold-linked ones exist. 

However, as historical data shows, Bit Bonds incorporate higher volatility and a much higher expected return. The reason? The price of Bitcoin has always experienced soaring bullish movements in every market cycle, whereas the fluctuations that gold or inflation are subject to are much smaller.

This makes Bit Bonds more attractive for the state, which can afford lower interest rates, and for the investor, who can obtain a return similar to that guaranteed on average by the stock market (around 10 per cent) and a minimum degree of risk.

How much could the US save thanks to ‘Bit Bonds’?

According to some estimates, refinancing $2 trillion of debt with Bit Bonds at 2% instead of 5% would save the US government about $700 billion over 10 years. These savings could lower some debt, finance public programmes, or make infrastructure investments without raising taxes.

The key concept behind Bit Bonds is familiar to anyone interested in the investment world: the asymmetry between risk and return:

• In the worst-case scenario, Bitcoin does not go up, but the government still pays less interest.
• In the best case, Bitcoin will rise, and the state will collect extra income to repay the debt.

This structure is not very different from many structured products already used in traditional finance, in which a low-risk asset is combined with a more volatile one to create a profile with a more favourable risk-return balance.

Moreover, pension fund issuers, insurance companies and sovereign wealth funds are often reluctant to invest directly in cryptos. But if rating agencies were to classify Bit Bonds as ‘quasi-risk-free’ (because the state guarantees the principal), these instruments could enter institutional portfolios.

In short, for the retail investor, Bit Bonds could be the perfect gateway into the crypto world. They don’t require wallet setup or the vagaries of custody. They’re just like government bonds but with an edge.

In an era of trillion-dollar deficits and a total lack of fiscal discipline, Bit Bonds offer an innovative solution: harnessing the growth of Bitcoin to ease the burden of interest and lower (at least some of) the national debt. 

One thing is sure: if even part of this idea becomes a reality, we could be at a turning point. In a few years, we might say, “This is when everything changed.”

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Standard Chartered has replaced Tesla with Bitcoin in its Mag 7B index, citing higher yield and lower volatility. Discover how cryptocurrency has entered the realm of elite assets.

The banking giant Standard Chartered has released a new report proposing a variation of the well-known “Magnificent Seven,” which includes seven major tech companies that dominate the global stock market. In this latest version, called “Mag 7B,” Tesla shares have been replaced by Bitcoin.

This approach evaluates whether cryptocurrency can be a viable alternative—if not a superior one—to one of the most iconic companies in the technology sector. Early results indicate that Bitcoin has provided higher returns with less volatility. Tesla is struggling due to the significant downturn it experienced following Donald Trump’s arrival in the White House.

Tesla shares and Bitcoin: what is the Mag 7B index and the information ratio

Substituting Bitcoin for Tesla shares in the Mag 7 index, which replicates the behavior of top global technology assets, creates what we can call the Mag 7B. This idea is not original; it comes from Standard Chartered, one of the leading banks in the UK. Interestingly, Geoffrey Kendrick, the bank’s Head of Digital Assets Research, stated that this new composition could generate returns approximately 5% higher from 2017 to the present while reducing average annual volatility by nearly 2%.

This claim is particularly evident when analysing the information ratio, which measures an asset’s extra return compared to a market benchmark about the volatility of its differential returns against a reference index. The information ratio helps evaluate an asset’s performance by comparing it to its associated risks.

Replacing Tesla shares with Bitcoin within the Mag 7 index yields a higher information ratio, suggesting better performance: 1.13 compared to 1.04. Kendrick’s decision to include Bitcoin instead of Tesla shares is based on the observation that Bitcoin behaves more like a tech stock than a traditional store of value. Consequently, it is more correlated to the Nasdaq 100—an index tracking the performance of the 100 most capitalised American tech companies—than gold.

Additionally, the data indicate that since January 2025, following Donald Trump’s assumption of the presidency, Bitcoin’s price performance has shown similarities to Nvidia’s, while Tesla’s seems to be more closely aligned with Ethereum’s in terms of volatility.

Will Bitcoin in institutional wallets become the norm?

The decision to include Bitcoin in the Mag 7B index at the expense of Tesla shares is more than just an academic exercise; it signifies a significant shift in the investment landscape. Various funds, including sovereign wealth funds, are increasingly exploring direct exposure to Bitcoin. BlackRock CEO Larry Fink has emphasised this trend over the past two years. With the recent launch of BlackRock’s Bitcoin ETF in Europe, the prospect of institutional investors allocating capital to Bitcoin has become even more tangible. Furthermore, Europe is home to many affluent savers considering investing in a new but undeniably solid asset.

In summary, Kendrick’s analysis extends beyond potential returns. The lower volatility that could be achieved by substituting Tesla shares with Bitcoin indicates that this cryptocurrency may help rebalance the overall risk of a technology-focused portfolio. The conclusion is clear: Bitcoin is no longer an outsider; it can now be regarded as a legitimate asset in innovation-oriented portfolios.

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Fidelity Investments and World Liberty Financial, the decentralised finance project (DeFi) backed by the Trump family, announced the launch of two new stablecoins.

Two significant pieces of news regarding stablecoins have recently garnered attention in the crypto market. The first involves Fidelity Investments, one of America’s leading investment firms and an issuer of Bitcoin spot ETFs.

The second stablecoin is USD1, promoted by World Liberty Financial (WLFI), a decentralised finance (DeFi) project backed by former US President Donald Trump. Read on to learn more about these two new stablecoins in the crypto market!

Fidelity Investments prepares to launch a stablecoin

Fidelity Investments, a leading global asset manager, is set to launch its stablecoin, which is expected to be released by the end of May 2025. The Boston-based investment firm aims to create its version of digital cash, following its exploration of the cryptocurrency sector with the introduction of spot ETFs for Bitcoin and Ethereum in 2024.

The upcoming stablecoin is part of Fidelity’s recent proposal to the U.S. Securities and Exchange Commission (SEC) to introduce a tokenised version of its Treasury Digital Fund. This fund comprises cash and U.S. treasuries (government bonds) and is only available to institutional investors and hedge funds.

This initiative may have been influenced by Donald Trump’s election, which marked a shift in the previous administration’s stance toward cryptocurrency. Since the early stages of his election campaign, Trump has promoted pro-cryptocurrency policies and supported the growth of stablecoins.

World Liberty Financial introduced USD1

To illustrate our earlier point about Donald Trump’s support for stablecoins, we present recent news about World Liberty Financial. The Trump family’s DeFi project has launched USD1, a stablecoin.

This stablecoin, similar to the fund Fidelity plans to introduce to blockchain through tokenisation, will be fully backed by U.S. Treasury bonds, cash, or equivalent assets. Not much is known about USD1 except for the blockchains on which it will initially be available: Ethereum and the Binance Smart Chain, which is compatible with EVM.

In summary, recent developments in the cryptocurrency world reveal that Fidelity Investments has decided to launch its stablecoin in preparation for the public release of its Treasury Digital Fund. This product falls into the Real World Asset (RWA) category and has great potential to drive increased crypto adoption.

President Donald Trump has also shown a growing interest in cryptocurrencies and has actively promoted initiatives to position the United States as a leader in this sector. The establishment of World Liberty Financial and the launch of USD1 are concrete examples of this commitment.

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VanEck’s forecast of Bitcoin’s value in 2050 offers an in-depth look at the cryptocurrency’s potential to become a central element in the international monetary system.

What does the future hold for us? What do VanEck’s predictions for 2050 contained in a recently published analysis say? According to the investment fund, Bitcoin could establish itself as a key component of the global monetary system, ‘stealing market share’ from major fiat currencies globally. 

Specifically, Van Eck predicts that Bitcoin will be widely used in international trade, become one of the most commonly used means of exchange and an even more valuable store of value.  Here are VanEck’s Bitcoin predictions for 2050.

Bitcoin: the future of the international monetary system

To produce his predictions on the price of Bitcoin by 2050, Van Eck started with some estimates on global Gross Domestic Product (GDP) and growth. The scenario drawn by the hedge fund predicts that populist movements and the desire for re-shorting will cause global GDP growth to slow from 3 to -2%. 

He then analysed the international monetary system (IMS) in a broader sense, predicting a shift of world economies away from traditional reserve currencies. 

The US, EU, UK and Japan are gradually losing share in this respect. In addition, the decline of confidence in fiat currencies as long-term stores of value due to continuous and excessive deficit spending – when a government (and thus a central bank) or a company spends more than it collects by financing itself through the issuance of debt, be it public or private – is increasingly evident.

In short, VanEck argues that the gradual erosion of trust in traditional fiat currencies and the emergence of Bitcoin as a store of value are the main catalysts for a radical change in the global monetary system. BTC is set to carve out a prominent role in international transactions and within state reserves.

Why will Bitcoin emerge?

VanEck predicts that Bitcoin could establish itself as one of the main instruments for exchanging value globally while at the same time attaining the status of a universally recognised store of value, a role historically held by gold. This is mainly because of the growing erosion of confidence in fiat currencies that we analysed in the previous section, but also due to a substantial change in the global monetary balance of power.

The foundation of Bitcoin’s success lies in some unique characteristics that make it particularly relevant, especially in developing countries:

• Immutable property rights: Thanks to its decentralised blockchain, Bitcoin cannot be censored, confiscated, or stolen. This feature is particularly relevant in contexts where traditional systems are vulnerable to manipulation, corruption, or political instability.

• Sound money principles: This concept describes a currency that retains its value over time and is not subject to uncontrolled inflation or manipulation by governments and central banks. With a supply limited to 21 million units, Bitcoin represents an ideal model of sound money.

One of the main obstacles to the adoption of Bitcoin is the limited scalability of its network, a critical issue that is finding solutions through the implementation of Layer-2 blockchain. 

These networks improve Bitcoin’s scalability, allowing more transactions to be finalised without compromising its fundamental characteristics. The combination of immutable property rights, sound money principles, and technological innovation provided by Layer-2s paves the way for the creation of a global financial system capable of effectively responding to the needs of emerging countries.

Bitcoin 2050 predictions: what does VanEck tell us?

After analysing where BTC might be during the next chapter of its evolutionary history, let’s see what VanEck’s predictions say about Bitcoin’s price. According to VanEck’s estimates, by 2050, Bitcoin could be used to settle 10% of international trade. Furthermore, the investment fund predicts that many central banks will hold at least 2.5% of their assets in BTC. 

This scenario, at least as far as the US is concerned, is on its way to becoming reality. A proposal under discussion in the US Congress, known as the Bitcoin ACT, aims to convert part of the US’s gold reserves into Bitcoin.

In any case, VanEck’s forecast takes three main factors into account: first, the GDP of local and international trade regulated on Bitcoin; then, the circulating supply and velocity of the asset. The latter represents the frequency with which a monetary unit, in this case BTC, is used to conduct transactions within an economic system in a given period. It measures how quickly money or its equivalents ‘circulate’.

Bearing in mind Bitcoin’s possible role as one of the cornerstones of international trade and an asset in most of the world’s central bank coffers, and applying a given velocity coefficient to this scenario, VanEck stated that Bitcoin’s value could reach $2.9 million per unit, with a total market capitalisation of $61 trillion.

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The price of Bitcoin has surpassed $100,000, a historic milestone that was unreachable for many until a few years ago. How far can it go?

It happened! This morning, the price of Bitcoin surpassed $100,000. BTC managed to break the resistance most coveted by crypto investors in only two attempts. The first, which was unsuccessful, was made on 22 November.

Of course, the achievement of this very important milestone has sparked euphoria among enthusiasts who have been and are still celebrating the event. Find out how Bitcoin reached $100,000 and the cryptocurrency’s next price target.

Bitcoin price at $100,000: how did it get there?

Bitcoin’s price reached and surpassed $100,000 in a sprint. Until Monday, its price was orbiting the $96,000 zone, and after the first attempt to break through, the only resistance on its chart had failed. Then yesterday, after an unexciting first part of the day, BTC suddenly woke up, recording two consecutive +3% movements, the first from 17:00 to 21:00 and the second from 21:00 to 24:00. (Italian time). But it was from 1:00 a.m. onwards that Bitcoin exploded to the upside. It scored a massive +5% in about four hours, touching the $104,000 level.

We take the opportunity to sum up this incredible milestone in the last 30 days, as Bitcoin’s explosive price movement started precisely one month ago, after Donald Trump’s victory in the US presidential election. In this period, the price of Bitcoin has risen by $35,000. Never before had Bitcoin seen such a significant increase in monetary terms in a single month.

After its price surpassed $100,000, Bitcoin entered another order of magnitude, which, as those familiar with mathematics will know, is measured in powers of ten. It has been exactly seven years since this last happened, as BTC surpassed $10,000 on 29 November 2017.

What caused the latest Bitcoin price movement?

It is difficult to answer this question in the very short term, i.e. tonight’s price increase. At the same time, it is much easier to understand the logic that has made Bitcoin shine since January 2024. The approval of spot ETFs, which recorded $556 million in inflow yesterday, was the first spark that started this bull market cycle. Today, financial instruments issued by US investment funds hold about 1.1 million BTC or 5.5 per cent of its circulating supply.

Then, after several months of laterality, came the second major catalyst: the election of Donald Trump. If we stopped here, it would seem, especially if we focus only on the second event mentioned, that political events manipulated the price of Bitcoin. In reality, BTC has risen thanks to the endorsement of the future president and, above all, to the change in global attitudes towards him. Certainly, however, the election of a pro-crypto US president helped crypto supporters within institutions and governments to emerge.

In a few weeks, many countries other than the United States have declared that they want to integrate Bitcoin into their central banks as a reserve asset. The same can be said of some states or regions that want to use it as an inflation hedge within pension funds or investment funds.

In short, the future looks brighter than ever for Bitcoin and the cryptocurrency world. Although, after tonight, crypto enthusiasts need to find another shared goal. Since we’ve been talking orders of magnitude, why not take the million-dollar threshold as a reference? Surely, it will take time, but if there is one thing Bitcoin has proved, nothing is impossible. On the other hand, VanEck, one of the world’s leading crypto investment funds, expects the price of Bitcoin to exceed $2 million by 2050.

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