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@ Nicolau Teixeira
2025-05-06 13:41:50Bitcoin was created to offer a secure and decentralized alternative to traditional money, enabling financial transactions without the need for intermediaries. DeFi, on the other hand, emerged as an expansion of this concept, proposing decentralized financial services such as lending, exchanges, and yield generation. However, despite its promises of innovation, DeFi carries numerous risks, making it a dangerous bet for those who value the security of their Bitcoin.
What is DeFi?
DeFi refers to a set of financial applications that operate without the intermediation of banks or traditional institutions. These platforms use smart contracts to automate transactions, allowing anyone to access financial services without relying on third parties. In theory, DeFi promises greater financial freedom, but in practice it is full of risks, scams, and technical vulnerabilities that can compromise users' funds.
- The risks of DeFi for Bitcoin holders
Bitcoin is the most secure digital currency in the world, protected by a decentralized and censorship-resistant network. Unlike DeFi, which is still in an experimental phase and has already suffered numerous attacks, Bitcoin remains solid and reliable. When someone places Bitcoin in DeFi platforms, they give up the security of direct custody and trust weaker systems.
The main risks include:
01 - Hackers and code flaws: Smart contracts are written by programmers and may contain bugs that allow massive thefts. Over the years, billions of dollars have been lost due to vulnerabilities in DeFi platforms. 02 - Liquidation risks: Many DeFi applications operate on collateralization systems, where users lock Bitcoin to obtain loans. If the market becomes volatile, those Bitcoins can be liquidated at lower-than-expected prices, causing irreversible losses. 03 - Scams and rug pulls: DeFi is full of shady projects where creators vanish with users’ funds. Without regulation and without guarantees, those who deposit Bitcoin in these platforms may never recover their funds.
- Keeping Bitcoin safe is the best choice
Bitcoin was created to be self-custodied, meaning each user should have direct control over their funds without relying on third parties. By sending Bitcoin to DeFi platforms, that security is lost and the asset is exposed to unnecessary risks. The best way to protect Bitcoin is to store it in a secure wallet, preferably offline (cold storage), avoiding any exposure to smart contracts or vulnerable systems.
In summary, DeFi may seem innovative, but the risks far outweigh the potential benefits—especially for those who value Bitcoin's security. Instead of risking losing funds on insecure platforms, the wisest choice is to keep Bitcoin safely stored, ensuring its long-term preservation. While Bitcoin continues to be the best digital store of value in the world, DeFi remains an unstable and dangerous environment where few win and many end up losing.
Thank you very much for reading this far. I hope everything is well with you, and sending a big hug from your favorite Bitcoiner maximalist from Madeira. Long live freedom!