Bank of America Sees DeFi ‘Potentially More Disruptive Than Bitcoin’

Bank of America 3 21 2021 LearnCrypto Powered By Wyckoff SMI 2024

There is “no good reason to own BTC unless you see prices going up,” the bank says, but it is intrigued by decentralized finance.

Bitcoin is the most talked about cryptocurrency but Ethereum [the blockchain] has more features, including being more flexible” in its hosting of decentralized finance (DeFi) than the Bitcoin blockchain, according to Bank of America.

In its report, “Bitcoin’s Dirty Little Secrets,” published Wednesday, the second-biggest U.S. lender has a lot of things to say about the largest cryptocurrency, such as there being “no good reason to own BTC unless you see prices going up” and that its environmental record is poor.

The bank also calls central bank digital currencies “kryptonite for crypto” but it is intrigued by decentralized finance, which it says is “potentially more disruptive than Bitcoin.” The bank sees DeFi as a radical change to mainstream capital markets but, at $35 billion, has a long way to go compared to mainstream finance.

DeFi refers to the fast-growing area of automated, blockchain-based trading and lending platforms that might eventually pose a challenge to banks, Wall Street firms and insurance companies. But not now, says the bank.

“Credit creation is one of the key motors of modern finance. As yet, DeFi doesn’t do anything like this,” the report states.

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