Bitcoin's Mass Adoption Hinges on Embracing Decentralized Finance, Layer-2 Developers Say
Summary:
The article discusses the importance of Bitcoin (BTC) shifting towards the $57 billion decentralized finance (DeFi) market for mass adoption, as commented by Bitcoin layer-2 developers. The feature highlights the importance of moving away from solely P2P payments to explore creative solutions using the blockchain. The article also discusses the work of Bitcoin Virtual Machine (BVM), which allows anyone to establish a customized layer-2 Bitcoin blockchain. The BVM founder stresses the need for effective DeFi applications, despite the associated risks of attracting bad actors. The piece also presents the stance of several other Bitcoin layer-2 infrastructure projects.
For Bitcoin (BTC) to truly reach widespread acceptance, it needs to shift towards the $57 billion decentralized finance (DeFi) market, say developers of Bitcoin layer-2 infrastructures. Whilst Bitcoin serves as a currency, or a "digital gold", and more recently as a platform for digital items (Bitcoin Ordinals), its creative potential within the blockchain is largely untapped, developers argue. Bitcoin Virtual Machine (BVM) founder, who goes by the pseudonym "punk3700", believes limiting developers to pure P2P payments restricts innovative exploration and possibly excludes valuable use cases.
BVM, founded by punk3700 and launched in January 2023, adopted a modular Bitcoin layer-2 "meta-protocol" structure, making it possible for anyone to establish their own customized layer-2 Bitcoin blockchain. BVM serves as a bridge connecting the Ethereum Virtual Machine (EVM) and Bitcoin – a fundamental step towards the creation of a customer-facing layer on Bitcoin.
The BVM founder emphasised the importance of DeFi applications, acknowledging that they might attract "bad actors" to the ecosystem. However, he added that the decentralized world should grant developers the liberty to build and scale their creations. Last year, Willem Schroé, founder of cross-chain infrastructure company Botanix Labs and creator of Spiderchain, also voiced that Bitcoin can only reach its full potential if it's connected to the broader financial system.
Botanix Labs started working on Spiderchain - a proof-of-stake layer 2 implementing EVM to EVM bridges to allow interaction between Bitcoin and Ethereum Virtual Machine - in 2023. Schroé believes that enabling Bitcoin to access Ethereum-based tangible assets, stablecoins, DeFi, and non-fungible tokens (NFTs) is the first step in the right direction, as it unlocks a vast amount of potential value and development.
SatoshiVM, another layer-2 community project working on an EVM-compatible layer-2 Bitcoin solution - though it suffered a controversy over a recent token launch - has recorded over 400,000 unique wallets and processed upward of 4.2 million transactions, connecting both Bitcoin and EVM ecosystems.
Nonetheless, not all projects share the same optimism for Bitcoin's expansion. BitVM, another Bitcoin-based virtual machine project lead by Robin Linus of the ZeroSync project, is kinda skeptical about flooding Bitcoin with EVM-like tokens and implementing smart contracts. Rather, BitVM aims to enhance Bitcoin's transaction speed.
Punk3700, however, argues in support of building a general-purpose programming language and virtual machines on top of Bitcoin, noting that Bitcoin is an ideal consumer brand. They pointed to developments in GameFi, SocialFi, art, and artificial intelligence on BVM as examples of the variety of use cases possible on Bitcoin. In line with this, Alex Miller, CEO of Hiro, a company offering tools for building on Bitcoin layer-2 project Stacks, mused that Satoshi Nakamoto himself envisioned expanding the programmability of Bitcoin.
Published At
2/2/2024 3:19:36 AM
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