What Is DeFi and Where Does It Leave Bitcoin?

The Bitcoin bull and bear market cycles are a pattern that produces significant developments — when the market is cold, people tend to focus on building the next wave of groundbreaking technology. One of the most interesting things emerging from this particular bear market has been a concept known as “decentralized finance,” manifested primarily by services that allow you to earn interest or borrow against your cryptocurrency holdings.What Is DeFi?Decentralized finance, or “DeFi” for short, is an umbrella concept describing any financial services that are built on top of public blockchains like Bitcoin and Ethereum. It also encompasses all ICO activity, which, at present, mostly takes place on Ethereum.Stablecoins like Tether and Gemini dollar, which are essentially just IOUs for fiat sitting in reserves, do not qualify as DeFi projects by their inherent nature. Maker, on the other hand, includes both a collateralized lending system and stablecoin (DAI) that are both decentralized — making it more of a fit under the DeFi umbrella.Several systems have emerged that also offer DeFi lending services like Dharma Lever, Compound and Celsius Network. Other services, like dYdX and Nuo, allow you to short, hedge or margin trade. Prediction markets are also an emerging decentralized financial service, with Augur being the most relevant example. Consistent among all of these services, and all that decentralized finance has to offer, is...