Some senior investors in the field believe that 2024 will be a year of comprehensive construction and prosperity of the Bitcoin ecosystem, and many new elements will be integrated into the BTC network, such as BRC-137 and other innovations, to promote the prosperity of the ecosystem.
Various asset issuance protocols such as Atomicals, Runes, BTC Stamps, etc., have given rise to new token standards, such as ARC-20, SRC-20, ORC-20, as well as BRC-137 and BRC-420, demonstrating the diversity and innovation of the Bitcoin ecosystem.
The Bitcoin ecosystem is also facing challenges, such as relatively low scalability and soaring transaction fees. As a die-hard fan, I have witnessed Bitcoin from scratch to today's glorious situation; I firmly believe that through the development of innovative technologies and products or applications that meet the native scenarios, the Bitcoin ecosystem still has great potential and room for development.
If 2023 is the first year of Bitcoin's ecological vitality due to the inscription boom, then with the landing of spot ETFs and the arrival of the fourth halving, 2024 will undoubtedly be a prosperous year for the comprehensive construction and prosperity of the Bitcoin ecosystem.
The Bitcoin network, which was once considered resting on its laurels during the last bull run, has now been refreshed with a host of exciting new elements.
However, in addition to the inscriptions, what explosive items may appear this year?
What are the innovative propositions they represent?
How do we look at potential project opportunities in the big picture?
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Bitcoin Eco Game: Digital**, or Smart Contract?
We know that since the birth of Bitcoin, its positioning has been as a peer-to-peer electronic cash system, and it has been in the narrative of digital **; With the passage of time, many users and developers hope to further expand the application scenarios and ecological construction of Bitcoin.
In 2013, Vitalik Buterin came up with the blockchain concept of Ethereum, which he subsequently co-founded with G**in Wood and Joseph Lubin, among others.
At its core, Ethereum's programmability provides a platform for developers to build a variety of applications, giving rise to many layer2 applications, asset types such as ERC20 and ERC721, and various projects that follow the trend.
In fact, although Bitcoin is inferior to Ethereum in terms of TPS, block time, Turing completeness, etc., its original purpose as a cryptocurrency transaction has not prevented developers from introducing smart contracts and application development on it, thus opening a long-term game between fundamentalists in the Bitcoin community and developers trying to innovate.
Compared with the loneliness during the bull market from 2020 to 2021, Bitcoin ushered in the innovation represented by the Ordinals protocol and BRC-20 and other inscription asset types in this round of bull market. On the premise of not changing the underlying ** and security logic of Bitcoin, everyone can use its security consensus to do a certain degree of asset innovation, which will further consolidate the consensus of Bitcoin as a valuable digital asset and medium of exchange.
Overall, many ecological projects that rely on the Bitcoin network have injected new vitality into the otherwise idle Bitcoin assets. These protocols not only provide Bitcoin with more asset standards and new scenarios for protocol issuance, but also transform it from a purely static asset to an important contributor to cybersecurity.
This shift will attract more users to join the new narrative ecosystem, and the security of the Bitcoin network will be further improved, thereby attracting more applications and services to settle in, forming a virtuous circle.
Those new ecological paradigms that deserve attention
With the inscription boom brought about by the Oridinals protocol and the BRC-20 token standard, various Bitcoin asset issuance protocols have also quickly attracted market attention.
Diversified asset issuance protocols such as Atomicals, Runes, BTC Stamps, Taproot Assets, etc., have emerged, and have given rise to many new token standards such as ARC-20, SRC-20, and ORC-20.
In addition to the above-mentioned mainstream asset issuance agreements, there are also many asset agreements with rich scenarios and applications in the pipeline.
For example, BRC-137 is based on the Ordinals protocol, which allows anyone to create composable DIDs on the Bitcoin blockchain in a completely permissionless and decentralized manner, supporting the authentication and identification of users in various applications on the chain.
The BRC-420 standard is similar to ERC-1155, which can combine multiple inscriptions into complex assets, providing a wide range of application scenarios for gaming and metaverse fields (e.g., the ERC-1155 protocol is suitable for gaming scenarios where NFTs and FTs are combined).
There are also some Memecoin communities that have also started to launch new asset protocols on BTC, such as DRC-20 launched by the Dogecoin community, showing a diverse and innovative trend.
There are also various L2 ecosystems, as well as the asset innovation narrative above, and the development of projects that use Bitcoin as an underlying security asset has become a new highlight this year.
LST model: Staking bitcoin gives security.
The story of Bitcoin staking is not new, but the Babylon project has extended BTC staking to a new level. The project aims to secure the Cosmos public chain by implementing a slashing mechanism to use Bitcoin as a permissionless staking asset.
This innovative strategy not only transforms Bitcoin into an underlying interest-bearing asset, but also provides a solid security barrier for the public chain through the Bitcoin network.
DeFi mining mode: Stake bitcoin to obtain tokens.
Many emerging BTC Layer 2 projects, such as Merlin Chain and Bsquare, are exploring startup strategies for staking Bitcoin for mining.
Taking Merlin Chain as an example, the project is a Bitcoin L2 network, which integrates key modules such as the ZK-Rollup network, decentralized oracle network, and Bitcoin on-chain fraud proof, aiming to empower the native assets, protocols, and application ecology on BTC Layer 1 through Layer 2. TVL has now surpassed $2 billion.
The post-Bitcoin era is coming, and the community drives value discovery.
From the above, it is not difficult to see that the development of the Bitcoin ecosystem has brought new opportunities to the entire cryptocurrency field.
At the same time, we see that Bitcoin and related ecological tokens (such as STX, RGB, etc.) have also ushered in a process of rapid growth in value, of course, only for now, the ecological development of Bitcoin still faces many challenges.
The scalability of the Bitcoin network is relatively low, and if you follow Ethereum to develop DeFi, NFT, GameFi, DAO and other fields, the Bitcoin ecosystem will naturally fall behind. Because the Bitcoin network does not support complex smart contract interactions, it requires a safe and reliable scaling solution acceptable to the community to host larger-scale applications.
In the most typical example, BRC-20 transactions did lead to a sharp increase in Bitcoin's block space, which could cause congestion in the mempool to trigger a spike in transaction fees and an increase in transaction confirmation times.
The upcoming Bitcoin halving is expected to take place in late April 2024, when miners' block rewards will be halved, which will undoubtedly further intensify the divisive debate about Ordinal's technology and its related elements.
In addition to the need for innovative technologies to drive change, we should also expect more explosive products or applications in the Bitcoin ecosystem that meet the native scenarios. For example, there is still a gap in the infrastructure of how to keep the index decentralized in L2 construction, so as to gather more users and developers, so as to form a positive development cycle.
From the perspective of paradigm innovation, the Bitcoin network has its own strong security consensus and smart contract interaction shortcomings, so the construction of the Bitcoin ecosystem should be different from the trend of Ethereum, and developers should explore and develop native application scenarios around its unique asset attributes.
From the perspective of development stage, the current Bitcoin ecosystem is long and difficult, and the potential space to be tapped is still huge. In the current context of relatively abundant funds and strong user demand, there are still many scalable areas and innovative solutions for developing the Bitcoin ecosystem.
In short, with the help of cutting-edge Bitcoin token standards such as digital collectibles, meta-protocols, and BRC-20, as well as the spirit of open-source, fair, and shared encryption, a vibrant Bitcoin ecosystem is growing, and we will continue to focus on its grand vision and small innovations.