Bitcoin’s decentralized future is taking shape as Franklin Templeton enters the DeFi space, expanding its utility for investors and building on Satoshi Nakamoto’s original vision for a decentralized financial system.
Bitcoin’s DeFi Push: A New Utility for Investors
The narrative around bitcoin is expanding beyond its traditional role as a store of value to a potential DeFi asset competing with Ethereum and Solana.
Bitcoin is a decentralized digital currency that allows for peer-to-peer transactions without the need for intermediaries.
Created in 2009 by an anonymous individual or group using the pseudonym Satoshi Nakamoto, bitcoin uses cryptography to secure and verify transactions.
The total supply of bitcoin is capped at 21 million, with new coins generated through a process called mining.
As of 2022, over 18 million bitcoins have been mined, with a current market capitalization of over $1 trillion.
The Evolution of Bitcoin’s Utility
Franklin Templeton’s managing principal, Kevin Farrelly, views this development as a positive step, confident it will enhance bitcoin’s utility without diluting its core appeal. ‘I don’t think focusing on Bitcoin DeFi will dilute or complicate Bitcoin’s core narrative,’ Farrelly said. Instead, it expands Bitcoin’s utility for a specific type of investor — one with enough technical sophistication to optimize for yield, security, or custom portfolio needs.
Bitcoin's utility extends beyond its use as a digital investment.
It can facilitate cross-border payments, reduce transaction fees, and increase financial inclusion.
With over 300 million people worldwide without access to traditional banking services, Bitcoin offers a decentralized alternative for remittances and microtransactions.
Additionally, its open-source nature allows developers to create innovative applications, such as secure voting systems and transparent supply chain management.
These users aren’t replacing the ‘store of value’ thesis; they’re building on it. It’s not narrative dilution, it’s infrastructure evolution. The evolution is driven by Satoshi Nakamoto’s original vision for a decentralized financial system that promotes financial sovereignty and privacy, eliminating the need for transaction intermediaries.
Bitcoin’s Traditional Role as Digital Gold
Bitcoin‘s market cap today exceeds $1.9 trillion, accounting for nearly 60% of the total digital asset market value of $3.12 trillion. It’s the most liquid cryptocurrency, averaging several billion dollars in daily trading volumes worldwide, and several publicly listed companies have adopted it as a reserve asset.
The strong institutional uptake for BTC has been widely attributed to its simple, compelling narrative as digital gold—an asset that’s easy to understand relative to complex platforms like Ethereum or Solana. These platforms support a wider array of decentralized finance (DeFi) applications and use cases, helping their native token holders earn additional yields on top of their spot market holdings.
Digital gold refers to a digital representation of physical gold, allowing investors to buy and sell gold without the need for physical storage.
It's often stored in online vaults or wallets, providing 24/7 access to one's investment.
Digital gold can be traded on various platforms, including exchanges and brokerages, with prices tied to the spot price of gold.
This form of investment has gained popularity due to its convenience, security, and ability to diversify a portfolio.
The Rise of Bitcoin DeFi
The buzz around Bitcoin DeFi at the Bitlayer event and the main Token2049 conference was tangible, highlighting the growing demand among BTC holders for additional yield opportunities. ‘Bitcoin DeFi with trust minimized bridge, sustainable yield products for onchain bitcoin holders is becoming very important for bitcoin asset holders and the network maintainers,’ Charlie Yechuan Hu, co-founder of Bitlayer told CoinDesk.
‘At Bitlayer we are building important infrastructures which can empower the Bitcoin DeFi with our BitVM technologies,’ Hu added. ‘A lot of interesting Bitcoin DeFi use cases can make bitcoin assets more valuable, give users more reason to hold and use in the future’
The Benefits for Miners
This BTC DeFi trend could also benefit miners, who are rewarded for mining blocks. While the per-block reward is halved every four years, increased on-chain activity driven by DeFi applications could help offset this reduction through higher transaction fees, supporting the network’s security and sustainability.
‘Importantly, Bitcoin DeFi also introduces new transaction fees — a critical component for the network’s long-term sustainability and security as block rewards continue to decline,’ Farrelly said.
