Staking Will Define Bitcoin's Role in the Global Digital Economy in 2025

Bitcoin has historically been used for two main things: as a store of value and a medium of exchange. These two use cases have served the burgeoning digital economy well, as evidenced by bitcoin's roughly $2 trillion market cap and millions of institutional and retail users around the globe. These two use cases can be considered "native" to Bitcoin in that BTC holders do not need to trust third parties to benefit from them, while "foreign" use cases would include lending and borrowing, which involve reliance on centralized intermediaries.

So it's fair to say that Bitcoin has achieved global prominence, including inspiring the creation of Ethereum and thousands of other protocols and tokens and BTC becoming the reserve currency of El Salvador, on just two main use cases. Is this enough to continue its exponential impact on finance? Based on Bitcoin's extraordinary contributions to transforming our global systems to-date, it certainly could be, but I would argue that the introduction of additional native use cases—that is, those that retain the core tenets of decentralization and self-custody—will further Bitcoin's impact on the world's stage. The advent of novel security sharing protocols have made BTC staking a third native use case for Bitcoin, which will define the next era of its growth.

Bitcoin staking as a means of enhancing the security of Proof-of-Stake (PoS) systems while retaining user control enhances the utility of bitcoin as an asset for holders, while also providing a key service to Layer-2s, data availability layers, oracles, wallets and liquid staking token providers. By enabling both institutional and retail holders to realize staking rewards without having to liquidate their positions, BTC gains a new role within the broader digital economy.

PoS-based systems also tap into the decentralized security architecture for Bitcoin, safeguarding their ecosystems. Such synergy has furthered the bridging of Proof-of-Work (PoW) and PoS worlds and created more financial utility for bitcoin, the asset.

Do PoS chains need added security?

The short answer is yes. Because PoS chains are secured by validators that stake capital, security increases with the amount of value staked. But, it can be difficult for smaller chains to incentivize staking validators, and so high inflation is often leveraged to attract capital with greater rewards. The downside to this approach is that the high inflation can't then be used to incentivize applications being built on the chain—which hampers the growth and ultimately the success of the project. The pool of potential validators with capital within the Ethereum ecosystem is also only so big.