Cryptocurrency continues to break new ground, offering novel ways for users to utilize their digital assets.

For years, bitcoin lacked smart contract capabilities that allowed holders to do much of anything with their crypto beyond buying and selling. Now, multiple projects are building to change all that.

In a recent discussion, Mark Blair, Head of Strategy at BeL2, shared insights with Roundtable anchor, Rob Nelson, on how the bitcoin smart contract chain is empowering bitcoin holders to utilize their assets through peer-to-peer loans.

Blair used the example of Michael Saylor and MicroStrategy to illustrate the potential. Saylor's strategy involves acquiring bitcoin through loans from centralized entities, which he then uses to buy more bitcoin, creating a cyclical process of investment. Blair explained that BeL2's technology allows individuals to set their own loan terms, acting in essence as their own banks. This peer-to-peer loan system enables bitcoin holders to lend or borrow against their assets without involving traditional financial institutions.

"Could I set it so that somebody could borrow against my bitcoin?" Nelson questioned. Blair confirmed, emphasizing that users could become either lenders or receivers of loans. The technology ensures that bitcoin remains on the network, avoiding taxable events typically associated with swapping for wrapped bitcoin.

A critical concern raised by Nelson was the risk of loan defaults. "What if the person defaults on the loan?" he asked. Blair introduced the role of arbiters, third-party verifiers who ensure the terms of the loan are met. If a borrower defaults, the arbiter steps in to resolve the issue, ensuring the lender's bitcoin is returned. This mechanism protects lenders from losing their assets due to bad actors.

Blair highlighted that BeL2's technology allows other blockchains to integrate these features, broadening the scope of decentralized finance. He envisioned a future where businesses and individuals might prefer using decentralized loans over traditional banking methods.