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Many people see Bitcoin as the leading cryptocurrency but look elsewhere for innovative applications, products, and protocols. As a result, the ongoing growth of Bitcoin in the application space has largely flown under the radar, although there is substantial growth. In fact, the ongoing expansion of Bitcoin-based services continues to accelerate.
Bitcoin-Based Protocols Offer Innovation
Recent research by The Block into Bitcoin and its viability for next-generation applications yield some interesting insights. it is essential to look at the world’s leading cryptocurrency beyond the base layer it provides today. While the Bitcoin network has been chugging along for over a decade, it is capable of much more than processing transactions and keeping transparent records on the blockchain. In fact, it has become an appealing base layer for many builders.
While Ethereum’s network value is largely on par with the applications running on top of it, that is not the same for Bitcoin. The trillion-dollar network – before the recent market dip – has a handful of known applications, which represent a fraction of the network’s valuation. Things are slowly improving as more builders create value on top of Bitcoin through various initiatives and narratives.
Additionally, one has to acknowledge Bitcoin is the most stable and secure base layer. While it may not be the fastest in throughput or cheapest in fees, it is a reliable platform for current and future development. The community and maintainers have shown a strong resistance to attempts to change Bitcoin’s core rules – consensus algorithm, supply, etc. – whereas Ethereum and consorts are known for rapidly modifying their core technologies based on user demand.
An Ongoing Evolution of Bitcoin-Based Protocols
Historically, Bitcoin has seen numerous efforts to expand its core functionality. Initial ideas date back as far as December 2012, when Colored Coins were introduced. The launch of Counterparty in 2014 and MasterCoin making its presence known in 2013 are other early highlights. However, it has been quiet on that front between 2014 and 2018, when builders showed a renewed interest in extending Bitcoin’s functionality.
In fact, 2018 was a very busy year, with the help of RSK, Liquid, and the first Lightning Network implementation going live. In 2020, Sovryn came to the mainnet, shortly followed by Stacks and its smart contracts. This year, Taro announced its asset issuance protocol for Bitcoin, indicating many opportunities remain left unexplored.
Looking closer at Stacks, it is evident there are many benefits to these smart contracts. Whether one aims to explore NFTs, decentralized finance (DeFi), the Blockchain Naming System (binding Stacks usernames to off-chain state to establish open namespaces with customizable properties), the Proof of Transfer consensus mechanism, mining and stacking, or the Clarity coding language, Stacks makes it all accessible to enthusiasts.
With the ongoing help and dedication of passionate builders, Bitcoin can become the next frontier for decentralized finance opportunities and more. However, there are more initiatives that may not get the most media attention, but that doesn’t make them any less valuable to the long-term appeal and success of the Bitcoin ecosystem.
Making Bitcoin More Useful
Various organizations and teams shift their attention to Bitcoin as the next frontier for application development. Lightning Labs has confirmed it will leverage the Lightning Network to issue assets. Additionally, they aim to explore a new stablecoin, but one collateralized by BTC on the Bitcoin network. It would give a new utility to bitcoin as a currency and show volatility and stability are not mutually exclusive. In addition, it strengthens the Lightning Network’s position across emerging payments and as a catalyst for BTC payment adoption.
On top of that, there is the recent fundraising by Trust Machines. Raising USD 150 million to bring more utility to Bitcoin is no small feat. Trust Machines will build the necessary infrastructure for applications to thrive and onboard users to Bitcoin, either as an enthusiast or a builder. There is a tremendous desire to take Bitcoin to the next level, and the puzzle pieces are slowly falling into place to make that happen.
While we referend Stacks earlier, the ecosystem notes various startups and projects leveraging its technology. The efforts by Superfandom, Gamma, Arkadiko, and others should not be overlooked. That also applies to Sovryn and others building on Rootstock (RSK), as they all share the goal and vision of bringing more utility to the world’s most stable base layer.