Bitcoin (BTC) has always been the face of crypto, the first thing that comes to mind when you think of this market. But for years, its role has been largely static—held as a store of value, yet rarely used for anything else. Then BTCFi entered the scene: unlike traditional DeFi, which has been dominated by Ethereum (ETH) and other smart contract platforms, BTCFi is built around Bitcoin as the core asset.

In the last quarter of 2024, BTCFi’s total value saw a massive surge—from $800 million all the way to $6.5 billion. The momentum is impressive, to say the least. More institutional players are taking notice, and analysts predict that by 2030, roughly 2.3% of Bitcoin’s circulating supply (about $47 billion) could be actively used in decentralized finance. 

So clearly, BTCFi is not just a passing trend. But why is it gaining so much traction? Can it really be called the future of Bitcoin’s utility as a financial asset?

Let’s try to figure it out.

What is BTCFi, and why is it growing now?

BTCFi represents the intersection of Bitcoin and decentralized finance, with the first crypto playing the role of the core asset in this case. Typically, DeFi platforms have been built on blockchains like Ethereum, while Bitcoin holders had to wrap their BTC into ERC-20 tokens (like wBTC) to participate in this field.

This kind of tokenization started picking up the pace around 2020, allowing BTC holders to access DeFi services that are typically not available on the Bitcoin blockchain. These “wrapped” tokens are built in a way that makes them compatible with other blockchain networks. And so, they effectively extended Bitcoin’s functionality.

However, advancements in Bitcoin L2 solutions and LRTs, or layered rollup technologies, are now changing the rules. It is becoming unnecessary for Bitcoin to use “second class citizen” ERC-20 tokens anymore.

BTC LRTs, for example, operate on Ethereum and other chains as well, but use Bitcoin as the primary collateral in transactions. This means unlocking the use of Bitcoin as a yield-generating asset in other networks beyond its native chain.

The emerging Bitcoin L2s, meanwhile, are tackling this blockchain’s long-standing scalability issues, allowing for faster and more cost-efficient transactions. These innovations are going to fundamentally redefine Bitcoin, turning it from a passive store of value to an actively utilized financial asset.

Why is BTCFi the gateway for Bitcoin whales in 2025?

Large Bitcoin holders—miners, in particular—have often used CeFi loans backed by their BTCs to fund their operations since they didn’t want to outright sell those assets. This practice is still going on today, but BTCFi promises to make some changes. And that’s where everything will start from, really: by BTCFi enabling new opportunities for Bitcoin holders to put their assets to work.

Soon enough, Bitcoin whales will start looking at BTCFi as a powerful gateway that can be used to enter the DeFi space. And the way I see it, there are two key factors in 2025 that will influence that perception.

The first is the rise of Bitcoin ETFs. BTC ETFs currently account for almost 6% of all Bitcoin supply, having crossed $100 billion in holdings at the beginning of 2025. With them gaining mainstream traction, Bitcoin is increasingly perceived as the safest and most stable cryptocurrency asset.

This makes it a prime choice for DeFi, attracting large-scale holders who want to use their BTC without selling. Earlier in February this year, Goldman Sachs announced that it had invested $1.63 billion in Bitcoin ETFs. That’s easy proof right there.

The second major factor is the appearance of BTC L2 technologies, which we’ve already covered earlier. Until recently, the lack of scalability and transaction efficiency held Bitcoin back from DeFi adoption. Now, we are going to see a surge of L2 solutions that will enhance the network’s performance. And here’s the important part: they will do so while preserving Bitcoin’s core principles of decentralization and simplicity (and, hence, its robustness).

What DeFi platforms need to do for proper BTCFi integration

There are several challenges that will need to be overcome before BTCFi can achieve truly seamless integration. The biggest technical issue will be ensuring that Bitcoin-based L2 solutions become genuinely trustless. At the present time, they are not quite there, often relying on intermediaries and centralized elements, which goes against Bitcoin’s core philosophy.

The good news is that there’s a lot of R&D going on to make it happen. If successful, it could make the vast amounts of BTCs that are currently just lying there “collecting dust” be useful in DeFi.

Another big challenge is going to stem from people’s trust. Among Bitcoin holders, there are many who do not quite trust Ethereum and the existing Bitcoin tokenization methods. The key to winning them over will lie in creating robust and cost-effective solutions on the native Bitcoin network. Having a fully trustless and inexpensive execution layer on the BTC blockchain could really become the dealbreaker for these people.

The future of Bitcoin: More than just ‘digital gold’

For years, Bitcoin has been carrying the moniker of “digital gold”—a safe-haven asset meant for holding rather than using. These days, this is becoming increasingly untrue. As more institutional players enter the crypto space, the potential for BTCFi to become Bitcoin’s next-level evolution is very real.

The demand is on the rise, and the infrastructure is already being built. For Bitcoin whales looking to maximize their assets without selling, BTCFi could become the perfect answer.

Michael Egorov

Michael Egorov is a physicist, entrepreneur, and crypto maximalist who stood at the origins of DeFi creation. He is a founder of Curve Finance, a decentralized exchange designed for efficient and low-slippage trading of stablecoins. Since the inception of Curve Finance in 2020, Michael has developed all his solutions and products independently. His extensive scientific experience in physics, software engineering, and cryptography aids him in product creation. Today, Curve Finance is one of the top three DeFi exchanges regarding the total volume of funds locked in smart contracts.

Bitcoin is a technology. It is not some force of the universe, some natural element or mineral that was “discovered” floating out in the ether. It is a technology. Technologies are created by human beings, not discovered. They are designed. That design has intent, elements of it are made specifically in a way to facilitate that intent. The tolerances of what a technology can or cannot handle are a result of those design decisions, which are in turn a result of the intent. 

New Bitcoiners are being brought into the world of Bitcoin through a lens that obscures and distorts the realities of Bitcoin as a technology and what that entails, and tries to pack it into the box of “digital gold.”

Bitcoiners are becoming goldbugs. People who thing Bitcoin is some magic thing that is decentralized “just cause,” whose future success is preordained and an absolute certainty.

This is a disastrous way for people to conceptualize Bitcoin. Bitcoin is a decentralized computer network. The conditions of a network are not a static thing. Environments change, network loads change, behavior of network users change. All of these things can have impacts on the viability and functioning of the network itself. 

Gold doesn’t need patches for vulnerabilities. Gold doesn’t have to overhaul major subsystems because a change in user behavior overloaded them to the point of not functioning correctly or efficiently. Gold doesn’t need to worry about Denial of Service attack vectors that could disrupt, or worst case bring down, the entire “gold network.” 

Bitcoin does. Bitcoin is not “digital gold,” it is a decentralized network made of software individuals actually have to run and maintain. The Bitcoin goldbugs have completely lost connection with this reality, at least when it comes to rationally assessing risks to Bitcoin, or ways it genuinely could fail or be co-opted. 

Bitcoin is going to have problems it needs to solve, at a fundamental technical level. It already does, and it will have more. This is how technology works, it is an inherent part of it. Bitcoin’s value stems from its use as a censorship resistant network, a freedom money no one can stop you from using. That is its core valuable characteristic. 

That characteristic hinges entirely on its decentralized nature. 

If people do not work to defend that decentralized nature, to interact with Bitcoin in a decentralized fashion, to improve and fix it as needed to counteract limitations or pressures encouraging centralization, then it will not remain decentralized. 

We are going to very soon regret the consequences of focusing so much outreach the last few cycles purely on spreading this “digital gold” narrative. This entire generation of Bitcoiners does not fundamentally understand that decentralization isn’t a static unchanging characteristic set in stone forever. 

It needs to be maintained. 

This article is a Take. Opinions expressed are entirely the author’s and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

Cutter Hodierne knew the odds were against him. As an independent filmmaker trying to secure funding for “Cold Wallet,” a crypto thriller about a heist gone wrong, he faced the usual hurdles—hesitant investors, an unpredictable industry, and a financing system that favored big studios over fresh voices.

“In Hollywood’s centralized model, breaking in is difficult,” he said. “You never know if you met the right person, if your script was overlooked, or if your work is truly considered.”

So instead of taking the traditional route, he turned to the decentralized film industry. Often referred to as Film3, it leverages blockchain technology, community voting, and cryptocurrency to fund movies, and television series. Unlike the traditional Hollywood system, which relies on centralized studios, agents, and intermediaries, Film3 lets filmmakers connect directly with their audiences and financing.

Hodierne put 10 minutes of his film up on the Decentralized Pictures website for review, where a community of producers, writers, investors, and film buffs got a look at his sizzle reel. In exchange for reviewing the clip, they earned $FILM, Decentralized Pictures’ token, which the studio says is “fuel for the platform. Users can stake them on their favorite projects, use them to pay others to review their own submissions (as a rewards pool), or simply purchase entry vouchers to pay for application fees for various creative financing rewards.”

One reviewer in particular was especially struck by the clip: “Steven Soderbergh, the king of the heist genre, gave us his blessing,” said Hodierne.

Soderbergh invested in the film, and Decentralized Pictures followed on with a grant, giving “Cold Wallet” enough money to make Hodierne’s movie. Now screening as a “Steven Soderbergh Presents” project, the movie is at select theaters and available for rent or purchase on Apple and Amazon Prime Video, and has garnered respectable reviews.

“Hopefully, it connects with viewers,” Hodierne said. “What excites me most is that you can rent and buy it on-chain with crypto—it’s highly appropriate.”

It’s another big step in the journey of the dominant studios in the Film3 movement, Decentralized Pictures and Gala Films, which have more than 60 movies and TV series in the works.

“We’re building the studio of the future,” said Decentralized Pictures co-founder Roman Coppola, a member of the Coppola filmmaking family. “At our company, American Zoetrope, and in my dad’s work, we value community and a cafe culture where people come together, share ideas, and compare notes.”

Coppola and others pointed out that just as important as community participation is the decentralized funding model that can support filmmakers, particularly those with distinctive voices and meaningful stories to tell, by allowing them to bypass industry hierarchies.

“The term we’ve been using—DeFiFi, decentralized film finance—represents a shift in film funding,” Stacy Spikes, co-founder of movie subscription platform MoviePass said during an interview with Decrypt at ETH Denver. “Distribution companies will still be needed to push films into the marketplace, but until now, back-end participation wasn’t possible. With smart contracts, it is.”

The idea is already gaining traction. In 2024, Film3 made history when actress Mena Suvari earned a Primetime Emmy nomination for her role in “RZR,” a sci-fi series created by David Bianchi’s Exertion3 Films in collaboration with the blockchain-powered streaming platform Gala Film.

Spikes likened the potential of decentralized filmmaking to past independent and genre film movements.

“If you go with the community—particularly black and brown communities or genre films—Web3 is a great place to tap into,” Spikes said. “I feel that people who were hesitant to invest will now be more likely to do so because they know they’ll get their money back.”

Hodierne also noted that by eliminating distributors and sales agents, all proceeds go directly to the filmmakers and Decentralized Pictures, allowing them to reinvest in independent artists and future projects.

“As a filmmaker, I’ve seen how centralized and fickle the industry is. This shift is a big deal, especially as streaming platforms pay artists less while struggling themselves,” he said. “It’s an exciting convergence for films, and for ‘Cold Wallet,’ a crypto thriller, this feels like the perfect first step in opening that door.”