THE Australian Times published an article on how cryptocurrencies evolved and why DeFi could be the next big thing in finance
Traditional media is increasingly talking about cryptocurrency in a positive way. In a recent article, the Australian Times disclosed the differences between Bitcoin and Ethereum. The impetus for this interest appears to be Descentralized Finance (DeFi) and the numerous tools that are being developed for the Ethereum blockchain.
Although Bitcoin was launched to the public as the first cryptocurrency in 2009, Ethereum managed to move away from it in the DeFi area.
The creation of Ethereum in 2014 was clearly inspired by Bitcoin, as Ethereum uses the Bitcoin blockchain structure and then built the capacity for more complex tools.
Ethereum may outperform Bitcoin in a broader market
Ethereum was created to overcome and improve many obstacles of blockchain 1.0. One of them was the commercialization of “smart contracts”, a digital auto-execution contract, which was previously limited to the use of blockchain developers.
Smart contracts are easily accessible and have been used to create Autonomous Decentralized Organizations (DAOs). They were designed to be a form of digital venture capital fund accessible to the general public, without the need for a human to operate the system, thereby reducing high service charges.
Unlike a traditional fund, the decentralized platform does not have a single owner or administrator. It puts decision-making power in the hands of its investors in the form of a token called Ether – investment decisions are made based on a majority vote.
DAO was not perfect
In May 2016, up to 14% of Ether was owned by DAOs. During this period, a potential vulnerability of the system was found in its governance structure and investors were warned.
Shortly thereafter, this vulnerability was exploited through a series of cyber attacks that extracted 3.6 million ETH, or $ 7.5 million. This generated controversy with DEO investors; with some fighting for the recovery of the DEO and some calls for its dissolution.
When DAO was introduced, investors were sure that, through the blockchain cryptocurrency, it was impenetrable and hacker-proof, but that was not the case. Despite the DAO disaster, DeFi's development is expanding globally.
The road to the current state of the decentralized economy has at times been complicated, but it appears that DeFi has become popular enough to attract the attention of established media. This may lead to wider adoption in the future, as more people understand the features that cryptocurrencies and DeFi have to offer.