Amara is a farmer in rural Kenya. Banks require collateral or credit history she lacks for a $5,000 equipment loan. A DeFi protocol lets her lock Bitcoin as collateral and borrow stablecoins at 8% instead of 25% bank rates (or loans she can't get). What does this use case reveal about DeFi's value?

DeFi's code-based lending removes gatekeeping. Amara doesn't need a bank's permission or relationship history—just collateral and code. This financial access to 1.7 billion unbanked people is DeFi's revolutionary potential.

NFTs are unique digital items, often collectible or utility tokens.

Sidechains/Layer 2 exist to…

They add features or scaling while settling back to Bitcoin.

DeFi and NFTs on Bitcoin

8 min readarticleIncludes quiz · 3 questions

While Ethereum pioneered DeFi and NFTs, Bitcoin is developing its own versions through Ordinals, Inscriptions, and protocols built on Lightning. The Bitcoin approach prioritizes security and simplicity over features.

New layers and protocols bring decentralized finance (DeFi) and digital collectibles (NFTs) to Bitcoin.

Simple definitions:

•DeFi: Financial apps without central companies.
•NFT: Unique digital item recorded on a ledger.
•Sidechain/Layer 2: Separate networks secured by Bitcoin.
•Ordinals: Method to “inscribe” data on sats.

Key Takeaway

DeFi on Bitcoin is growing but fundamentally different from Ethereum DeFi. Bitcoin DeFi tends to be more conservative, focusing on lending and simple financial products rather than complex composable protocols.

Test Your Knowledge

3 questions · Passing score: 75%

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