Bitcoin’s bid to become ‘one chain that rules them all’ – TechCrunch

Bitcoin 2022 The conference brought more than 25,000 participants to Miami last month to discuss the future of the world’s largest cryptocurrency. The event described by the attendees asexpensive” And Compared to kissesA now infamous keynote speech emerged from Peter Thiel as venture capitalists rallied Bitcoin supporters against a list of people he described as Bitcoin enemies, including Warren Buffet and Jamie Dimon.

While Thiel’s speech captured the lion’s share of the attention surrounding the conference, several investors, developers, and founders in the Bitcoin community gathered at the same event to discuss a threat that may be even more pressing than the aforementioned spam competition.

Even with the overall cryptocurrency market plummeting this week, Bitcoin remains the world’s most valuable crypto asset with a market capitalization of around $589 billion as of May 9. Its prestige stems, in part, from the advantage of being the first cryptocurrency token on the public blockchain.

But as new blockchains continue to emerge, and after the summer of last year “DeFi” brought new momentum to Ethereum, Bitcoin investors had to start watching their emergence. Now, blockchain backers are pumping capital into efforts to ensure it can maintain its dominance as a form of money and expand into other use cases through decentralized applications (dapps) to keep pace with competitors like Ethereum and Solana.

Bitcoin Payments Feature

Bitcoin’s advantage is often described as its value as an inflation hedge, like gold, due to a fixed supply. Bitcoin proponents, including Thiel and Cathie Wood of ARK Invest and Michael Saylor of MicroStrategy, spoke at Bitcoin 2022 about its ability to act as a store of value when central banks loosen their policies and allow inflation to escalate, as has been the case in the United States throughout the majority of the COVID pandemic -19.

The reality was not quite that simple, as Bitcoin has often been traded amid periods of high inflation in the US, but Bitcoin clients argue that its value is most evident in developing nations, especially those with hyperinflation or with large proportions of individuals struggling. From a shortage of banks. They view it as a relatively safe asset that can enable faster and more efficient payments within and across borders.

The Bitcoin network itself supports only about five transactions per second, According to Binance crypto exchange. Combined with a Layer 2 protocol called the Lightning Network to increase its speed and efficiency while lowering transaction costs, Bitcoin is part of the infrastructure used by El Salvador and major crypto exchanges like Kraken.

startup Lightning Labs, which raised $70 million from its Series B round last monthAt the forefront of the development of Bitcoin’s Lightning Network. Elizabeth Stark, CEO of Lightning Labs and co-founder of TechCrunch, said it is building a Bitcoin Lightning Network infrastructure modeled on the Visa payments network.

Elizabeth Stark, CEO of Lightning Labs Image credits: Eva Marie Ozkategi/Bloomberg via Getty Images

Stark explained that the Lightning Network can perform hundreds of thousands of transactions per second by settling off-chain transactions in a separate ledger, thus freeing up space on the first Bitcoin blockchain layer while still adhering to its underlying protocol.

“People want access to Bitcoin, the asset… When you look at the stability, security and use-case of global payments, and aspects of global transactions, this is where Bitcoin and the Lightning Network will shine,” Stark said.

Lighting Labs recently announced a proposal to build Taro, a protocol that would allow unbanked individuals to send and receive money in the form of fiat currency representing their local fiat currency through mobile applications.

“If I was on Visa, I would be afraid, because there are a lot of people who have cell phones, but now there is no need to take advantage of the traditional system, and then merchants do not need to pay 3% fee plus 30 cents [for a transaction]. You can have significantly lower fees than the old system,” Stark Tell TechCrunch.

Startup Monfact, Partners with Visa To enable users to purchase goods and services with Bitcoin through the Lightning Network at any US e-commerce site using Visa bars.

While Lightning Labs focuses on improving global payments through the Lighting Network, trading platform Robinhood has found the network helpful in keeping network fees low on its new crypto offering, which was rolled out to users last month, according to Johan Kerberatt, Robinhood’s chief cryptocurrency, Tech. Crunch.

We will support Lightning on [Robinhood] The app, so you will be able to link it to payments to merchants directly with the Lightning Network,” Kerbrat said. “It also means that you will be able to create a channel between people who use Robinhood outside of Robinhood and be able to exchange bitcoin for a fee of near zero.”

More than just an origin

Bitcoin’s low fees, primarily enabled by the Lightning Network, and early widespread adoption mean that the blockchain has become synonymous with payments. Its closest competitor by value, Ethereum, is known for its high network fees and is still worth less than half the value of Bitcoin According to market value. Newer competitors like Solana offer lower transaction fees but are considered less secure.

But despite Bitcoin’s dominance in the field of payments, other blockchains are developing capabilities far beyond simple cash 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 issuing NFTs and offering DeFi lending products in which investors can earn interest.

As a result, Ethereum has been able to put together the largest ecosystem of tools, applications, and protocols in the crypto world, and even competitors like Polkdadot, Cosmos and Solana have more developers working on their blockchains than Bitcoin, according to Project Venture, Inc. Electric Capital. 2021 developer report.

Meanwhile, Bitcoin ranks only fifth in terms of the number of developers, after Cosmos and Solana. Its supporters are trying to give Bitcoin a boost and attract developers to work on new projects in the ecosystem.

“a lot of [discourse] It was just Bitcoin as an asset, not necessarily Bitcoin being the network. And now I think we’re starting to see this paradigm shift, as people look at it more as infrastructure,” Alex Chizhik, head of listings at crypto exchange Okcoin, told TechCrunch.

Chizhik co-chairs the Bitcoin Odyssey, an initiative that Okcoin launched in March in partnership with venture firms including Digital Currency Group, GSR and White Star Capital, to deploy $165 million in projects that will “increase Bitcoin adoption,” by group.

$165 million is a lot of money but it seems like a drop in the sea of ​​the largest blockchain in the world. Venture capitalists invested more than $30 billion in Web 3 last year, much of it flowing into on-chain projects that innately enable smart contracts, unlike Bitcoin.

Stacks, formerly known as BlockStack, play an important role in expanding Bitcoin use cases. Its open source network allows custom smart contracts to be built on Bitcoin, allowing developers to use the Bitcoin blockchain to create dapps. Dapps Built on the Bitcoin Network with Stacks CityCoins include, A token protocol through which local governments can raise funds from investorsand NFT exchanges such as Hey Layer and STX NFT.

“Ethereum is certainly leading the way in what can be done with things like DeFi and asset ownership, like NFTs, but that’s probably largely been in the past three years. I think Bitcoin now has this opportunity to catch up, take some of the best lessons learned, and unleash For value and a truly base layer chain,” Brittany Laughlin, executive director of the Stacks Foundation, told TechCrunch.

Munib Ali, Co-founder of Stacks Image credits: Alex Flynn/Bloomberg via Getty Images

The Stacks Foundation is a nonprofit arm within Stacks that supports governance, education, and grantmaking to improve infrastructure within the Bitcoin network.

“Our role is really how we support the growth of the network and make sure that we can deliver on our promise, which is a user-owned internet powered by Bitcoin,” Laughlin said.

Without a Taproot upgrade implemented on the Bitcoin network late last year, Laughlin explained, making transaction verification easier and faster, Bitcoin’s growth as an ecosystem would be even more limited. She noted that the Bitcoin community in general is reluctant to change anything about the protocol, and that even the Taproot upgrade was met with some internal resistance and struggle before it was finally implemented. Three years after he first proposed it. However, she said, Taproot does not solve all the challenges facing Bitcoin, and more changes may be required to continue building the network.

Ultimately, though, Laughlin believes that Bitcoin will prevail in the long run against other Layer 1 blockchains due to its first mover advantage.

“Anyone with $100 worth of Bitcoin, from El Salvador to New York City, if they want to get a loan for it [$100]Or, if they want to secure 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 launches products significantly later than Android, but has a greater focus on user experience.

“Bitcoin will be like Apple, will provide brand recognition, compatibility and ease of use – all of which come to mind when I think of Bitcoin.”

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