Summary: With the Merge, DeFi, and NFTs being the hot topics in the cryptocurrency industry over the past few years, it feels like Bitcoin and its community has been forgotten. Nonetheless, the Bitcoin ecosystem is still thriving and there have been some exciting developments, companies, and communities in the space. Let’s take a look at what ...
With the Merge, DeFi, and NFTs being the hot topics in the cryptocurrency industry over the past few years, it feels like Bitcoin and its community has been forgotten. Nonetheless, the Bitcoin ecosystem is still thriving and there have been some exciting developments, companies, and communities in the space. Let’s take a look at what we’ve missed with Bitcoin.
As the oldest and most established cryptocurrency, Bitcoin has always been considered digital gold. Many would argue that its value proposition lies in its hedge against government currencies as well as its reliability and low volatility, at least compared to other cryptocurrencies. This digital gold analogy extends into Bitcoin’s usability as well: it is only capable of around 7 translations per second, hardly enough for a future global currency. Additionally, the reason that Bitcoin has fallen by the wayside recently is its lack of native smart contract support, meaning that tokens and smart contracts cannot be built on the blockchain. Bitcoin is a digital currency in its purest form, and its simplicity provides a part of its value proposition.
Even though the Bitcoin blockchain does not provide native support for a lot of new developments, there are many solutions being built to bring more usability to the blockchain. For example, the Lightning Network, which is essentially a Layer 2 for Bitcoin allowing for infinite transactions between users with no fees, has been gaining a lot of traction lately and has a capacity of $100 million. The Lightning Network is the main way that people who use Bitcoin for day-to-day transactions interact, and companies like Strike, one of the companies influential in El Salvador’s Bitcoin adoption, build their Bitcoin payment infrastructure on Lightning.
Another development in the Bitcoin space is Taproot, which was one of the biggest events in Bitcoin since the Bitcoin Cash fork in 2017. Taproot was a series of upgrades that focused on bringing lower fees, enhanced privacy, and the potential for smart contracts to Bitcoin. Since it was implemented as a soft fork, it required 90% of miners to agree to the upgrade, and took months to finalize. Taproot was implemented in November 2021.
One of the protocols utilizing the features enabled by Taproot is Taro. The protocol allows for assets to be issued and sent on the Bitcoin blockchain through the Lightning Network. This effectively brings tokens to the biggest blockchain with zero fees and incredibly fast transactions. Taro has been controversial within the Bitcoin maximalist community, as they do not see the need of using Bitcoin to send “worthless” tokens, but there are several good use cases like stablecoins. Additionally, Taro makes it possible to send tokens over the longest-lasting and most reliable blockchain, which is a compelling value proposition.
The future of Bitcoin development is focused on small, incremental changes that will bring more privacy, scalability, and usability to the chain. For example, BIP324 is aimed at encrypting and obfuscating the data that is sent when running a Bitcoin node, making it possible to run a node where it is illegal or prohibited, as well as providing more privacy for node runners. This, along with other upcoming changes, will make Bitcoin better at the things it already does.
Even though Bitcoin may not be the most exciting cryptocurrency these days, it is still the biggest by a wide margin and has an active community. As the oldest blockchain, it sets a precedent with its near-100% uptime, status as digital gold, and institutional interest. Bitcoin may not be the top cryptocurrency forever, but it is definitely here to stay for the time being.
By Lincoln Murr