Bitcoin has both security and liquidity and now, with the addition of smart contract capabilities, it has all the ingredients required for DeFi to take off.

This guide will delve into DeFi on Bitcoin, explaining what DeFi is and how it has been applied to the Bitcoin network, as well as consider some challenges inherent within this nascent ecosystem.

The Bitcoin network continues to grow, with numerous ecosystems emerging and competing to make a difference in the space.

Until now, users could only spend, sell, or hold Bitcoin, whereas the Ethereum and decentralized finance (DeFi) space has moved far beyond this by offering a vast number of new use cases.

Bitcoin is the genesis of all other modern blockchains; however, with the rise of Ethereum, which enabled smart contracts and DeFi capabilities, Bitcoin lacked the ability to compete in the DeFi space.