Bitcoin 2022 The conference brought over 25,000 attendees to Miami last month to discuss the future of the world’s largest cryptocurrency. The event, which the participants described as “extravagant” and compared to bacchanaliaPeter Thiel’s infamous keynote speech was presented in which the venture capitalist rallied Bitcoin supporters against a list of people he called Bitcoin’s enemies, including Warren Buffett and Jamie Dimon.
While Thiel’s speech garnered the lion’s share of the attention surrounding the conference, many investors, developers, and founders of the bitcoin community gathered at the same event to discuss a threat that could turn out to be much more serious than the aforementioned persona non grata – competition.
Despite the overall crypto market crashing this week, Bitcoin remains the most valuable crypto asset in the world with a market capitalization of around $589 billion as of May 9th. Its status is partly due to the fact that it was the first cryptocurrency. token in the public blockchain.
But as new blockchains continue to emerge, and after last year’s “DeFi” summer brought new momentum to Ethereum, Bitcoin investors have had to start looking back. Now, blockchain proponents are investing in efforts to ensure that it can maintain its dominance as a form of money and expand into other use cases through decentralized applications (dapps) to keep up with competitors like Ethereum and Solana.
Advantage of Bitcoin payments
The advantage of Bitcoin is usually described as its value as an inflation hedge asset, much like gold, due to its fixed supply. Bitcoin proponents, including Thiel, Cathy Wood of ARK Invest, and Michael Saylor of MicroStrategy all spoke at Bitcoin 2022 about its ability to act as a store of value when central banks loosen their policies and allow inflation to rise, as was the case with Bitcoin 2022. United States through much of the COVID-19 pandemic.
In reality, things are not so simple, since bitcoin often became cheaper during periods of rising inflation in the United States. They see it as a relatively safe asset that can provide faster and more efficient payments both domestically and internationally.
The Bitcoin network itself only supports about five transactions per second. according to the Binance crypto exchange. Bitcoin has integrated with a second layer protocol called the Lightning Network to increase its speed and efficiency while lowering transaction costs. This piece of infrastructure is used in El Salvador and major crypto exchanges such as Kraken.
Startup Lightning Labs, which raised a $70 million Series B round last month., is at the forefront of the development of the Lightning Network for Bitcoin. It is building the infrastructure for the Bitcoin Lightning Network, similar to the Visa payment network, Elizabeth Stark, CEO and co-founder of Lightning Labs, told TechCrunch.
According to Stark, the Lightning Network can process hundreds of thousands of transactions per second by conducting off-chain transactions on a separate ledger, thereby freeing up space on the first layer of the Bitcoin blockchain while maintaining the underlying protocol.
“People need access to Bitcoin, an asset… When you look at the stability, security, and use case of global payments, and aspects of global transactions, that’s where Bitcoin and the Lightning Network will shine,” Stark said.
Lighting Labs recently announced a proposal to create Taro, a protocol that will allow unbanked individuals to send and receive money in the form of stablecoins representing their native fiat currency through mobile apps.
“If I were Visa, I would be scared because there are a lot of people who have mobile phones, but now they don’t need to connect to the traditional system, and then merchants don’t have to pay a 3% fee plus 30 cents [for a transaction]. You can have fees that are significantly lower than the legacy system.” – Stark told TechCrunch.
While Lightning Labs is focused on optimizing global payments through the Lighting Network, trading platform Robinhood has found the network useful in keeping network fees low in its new crypto offering it introduced to users last month, said Robinhood CTO of Crypto, Johan Kerbrath. tech crunch.
“We will support Lightning on [Robinhood] app so you can connect it to pay merchants directly through the Lightning Network,” Kerbrath said. “It also means that you will be able to create a channel between people using Robinhood outside of Robinhood and will be able to exchange bitcoins with virtually no fees.”
More than just an asset
Bitcoin’s low fees, powered primarily by the Lightning Network, and early widespread adoption mean that blockchain has become synonymous with payments. Its closest cost competitor, Ethereum, is notorious for high network fees and still costs less than half as much as Bitcoin. by market capitalization. Newer contenders like Solana offer lower transaction fees but are considered less secure.
But despite Bitcoin’s dominance in payments, other blockchains are developing capabilities far beyond simple money transfers. As an open source blockchain, Ethereum allows developers to easily build decentralized applications or “dapps” on top of it, enabling use cases such as creating NFTs and offering DeFi lending products through which investors can earn interest.
As a result, Ethereum has been able to assemble the largest ecosystem of tools, applications, and protocols in the crypto world, and even competitors such as Polkdadot, Cosmos, and Solana have more developers working on their blockchains than Bitcoin. Electric Capital’s Developer Report 2021.
Meanwhile, Bitcoin only ranks fifth in the number of developers behind Cosmos and Solana. Its supporters are trying to give bitcoin a boost and get developers to work on new projects in the ecosystem.
“Full [discourse] it was only about Bitcoin as an asset, not necessarily Bitcoin as a network. And now I think we’re starting to see this paradigm shift where people are looking at it more like infrastructure.” This was announced to TechCrunch by the head of the listing of the Okcoin cryptocurrency exchange, Alex Chizhik.
Chizhik is the co-chair of Bitcoin Odyssey, an initiative launched in March by Okcoin in partnership with venture capital firms including Digital Currency Group, GSR and White Star Capital to direct $165 million towards projects that will “strengthen bitcoin adoption.” according to group.
$165 million is a lot of money, but it seems like a drop in the ocean for the world’s largest blockchain. Last year, venture capitalists poured over $30 billion into web3, most of which went to on-chain projects that, unlike Bitcoin, natively allow for smart contracts.
Stacks, formerly known as BlockStack, plays a critical role in expanding Bitcoin’s use cases. Its open source network allows the creation of custom smart contracts on bitcoin, allowing developers to use the bitcoin blockchain to build decentralized applications. Dapps created on the Bitcoin network with stacks include CityCoins, token protocol by which local governments can collect money from investorsand NFT exchanges such as Hey Layer and STX NFT.
“Ethereum is definitely leading the way in what can be done with things like DeFi and asset ownership like NFTs, but that has probably happened in the last three years. I think there is now an opportunity for Bitcoin to catch up, take some of the best lessons learned, and really unlock value and the underlying chain,” Brittany Laughlin, executive director of the Stacks Foundation, told TechCrunch.
The Stacks Foundation is a non-profit arm of Stacks that supports governance, education, and grants to improve infrastructure on the Bitcoin network.
“Our role is really to support the growth of the network and make sure we can deliver on our promise, which is a user-owned internet powered by bitcoin,” Laughlin said.
Laughlin explained that without the Taproot update implemented on the Bitcoin network late last year, which makes it easier and faster to verify transactions, the growth of Bitcoin as an ecosystem would have been much more limited. She noted that the bitcoin community is generally hesitant to change anything in the protocol, and that even the Taproot update met with some internal resistance and conflict before it was finally implemented. three years after it was first proposed. However, Taproot does not solve all the problems that Bitcoin faces, she said, and further changes may be needed to continue building the network.
Ultimately, however, Laughlin believes that Bitcoin will dominate other tier-one blockchains in the long run due to its first-mover advantage.
“Anyone with $100 in bitcoin, from El Salvador to New York, if they want to borrow against it [$100]or if they want to protect an asset with it, they can do so [with dapps on Bitcoin]” Laughlin said.
Laughlin compared Bitcoin’s race with other blockchains to Apple’s competition with Android, where Apple often releases products much later than Android but puts more emphasis on user experience.
“Bitcoin will be like Apple and provide brand recognition, interoperability and ease of use, all of which come to mind when I think of Bitcoin.”
Credit: techcrunch.com /