Blockchain 1.0 refers to encrypted digital currency applications represented by Bitcoin, which realize the issue, payment and point-to-point circulation of currency through technologies such as distributed ledgers, chain data and consensus algorithm.
Its core concepts include:
- Absolute decentralization
- High transparency operation
- No real-name authentication
Blockchian 1.0 innovatively realizes decentralized issue, anonymous payment (or transfer) and anonymous custody of digital currency based on blockchain technology and the principle of free currency economics. However, it does not realize the issue of financial lending business and financial derivatives business, which is indispensable and essential to the financial market. Despite the analogy between Bitcoin and gold, there is no denying that Bitcoin itself is a kind of electronic currency that is different from traditional currency system, and its original intention is to realize a kind of currency rather than assets in a stable environment. Since Bitcoin is a kind of currency, it can certainly be used in payment, deposit, lending and derivatives financial operations. From this perspective, it is clear that DeFi business focused on cryptocurrencies is the financial / monetary extension of blockchain 1.0. Currently most DeFi is based on mortgage lending and has huge development potential.
DeFi obviously does not violate the blockchain 1.0 in its core essence, decentralization, high transparency and no real name authentication are still its theoretical foundations. This has opened up another pole of financial services that echoes payment and circulation.
