Will Bitcoin’s ecosystem be the focus of the next bull market? 5 major logics support its rapid rise.

Could Bitcoin's ecosystem drive the next bull market? 5 key arguments suggest a rapid ascent.

Author: Mu Mu, Plain-language blockchain

Ethereum has the potential to surpass Bitcoin in many ways, including market value, but this is not in conflict with the growth rate of the undeveloped Bitcoin ecosystem and its becoming the focus of the next bull market. Today we will explore several reasons why we believe the Bitcoin ecosystem can rise…

01 Is Bitcoin old?

For many years, the most criticized point of Bitcoin has been its “outdated update iteration,” with many people believing that Bitcoin is old and outdated compared to innovative projects that change every day. However, the Bitcoin community has always adhered to its original intentions, always putting security and decentralization first, which is the value that enables the cryptocurrency field to exist in the long run. Many of the expansionary innovations proposed by new public chains in the past may be a kind of “castle in the air” that is fundamentally untenable and unsustainable when compromising security and decentralization.

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The Bitcoin community believes that only by adhering to these uncompromising principles can other iterations and innovations be discussed. As the birthplace of encryption, the Bitcoin community, including many projects that are based on the Bitcoin line and adhere to the uncompromising lines of security and decentralization, has also successfully emerged, which also indirectly proves that this approach is correct.

In fact, from another perspective, Bitcoin is already very successful and only needs to remain stable to defeat everything else. Innovation also comes at a cost. Similarly stemming from Bitcoin, pioneers who have the willingness to innovate and go their own way (new public chains) have played the role of exploring the front lines. In the process of their continuous trial and error, most innovative public chains have actually disappeared due to failure, and the few successful innovative public chains left behind are to some extent the forerunner test network of Bitcoin. The final successful ones, such as Ethereum, have explored a higher success rate and better scalability solutions for the encryption community.

Many times, letting others go first is also a kind of wisdom.

025 logical reasons for the rapid rise of the Bitcoin ecosystem

1. Indestructible consensus foundation

The strong consensus of the Bitcoin community is evident to the entire encryption community. Even the decentralized and uncompromising security ideas and “orthodoxy” advocated by the Ethereum community originated from the Bitcoin community. Therefore, the route of Bitcoin, including V God and other OGs, is supported, and they occasionally provide some suggestions and support. This is the biggest advantage of the Bitcoin ecosystem.

2. The urgent need of Bitcoin industry participants for the development of the ecosystem

The main unresolved issues in Bitcoin are the continuous reduction of production and the potential systemic risk caused by the decrease in block producer income. The development of the Bitcoin ecosystem can bring a large amount of transaction fees, which can cover the cost of providing security computing power. This is an urgent need for all holders in the Bitcoin community and billions of mining industry practitioners. Therefore, the Bitcoin community will spare no effort to promote the development of the Lightning Network, BRC20 protocol, and some smart contract layers to maintain its long-term interests.

3. Bitcoin itself has a huge volume, while the Bitcoin ecosystem is still in its infancy

Currently, the market value of Bitcoin is over 500 billion, and about 5 billion US dollars of Bitcoin has flowed out to participate in the DeFi of public chain ecosystems such as Ethereum, and almost no flow has entered due to the development of the Bitcoin ecosystem.

Under the value-added demand of cryptographic assets, the Bitcoin ecosystem with a market value of 500 billion assets as its backing can already obtain huge growth even if it only has a small overflow of Bitcoin’s own demand, let alone the future can absorb the inflow of mapping mainstream assets from other communities.

4. The diversification of Bitcoin ecosystem solutions brings more possibilities

1. Lightning Network and its Taro protocol

The off-chain expansion plan that is comparable to Web2.0 performance is bringing extremely fast payment experience. Some head platforms have supported the Lightning Network, and most head platforms are currently being accessed. At that time, the threshold for using the Lightning Network and wallets that support the Lightning Network will be greatly reduced.

1. Taro Protocol: A new Taproot-driven protocol, developed by the Lightning Network core team, which allows for the issuance of assets on the Bitcoin blockchain that can be traded instantly, with high capacity and low fees, through the Lightning Network. The Taro protocol, based on the Lightning Network, will provide excellent infrastructure for asset issuance on Bitcoin and will add more high-value use cases to the Bitcoin ecosystem, such as payment of stablecoins through the Lightning Network, thus giving the Bitcoin ecosystem the confidence to compete with the huge Ethereum ecosystem.

2. Stacks: A compliant Bitcoin smart contract layer

a. Better smart contract layer

A secure and efficient smart contract layer for Bitcoin that has been designed with scalability in mind.

b. Compliant

A rare SEC-registered compliant project, which brings more convenient and smooth development space in the context of huge regulatory pressure.

c. Better stablecoin SBTC

Stacks 2.0 brings a more decentralized Bitcoin stablecoin, SBTC, which brings native Bitcoin assets into DeFi and provides Bitcoin users with a new way to hold assets.

d. Compensate for the disadvantage of low inflation asset BTC for the development of the ecosystem

Although Stacks relies on the security of the Bitcoin network, it does not use BTC as GAS, because BTC is a scarce asset with a decreasing inflation rate and an upper limit on issuance, which becomes increasingly expensive in the future. If it is used as GAS, it is very unfavorable for the development of the smart contract ecosystem (the transaction fee is too high to spend BTC).

It can also expand BRC-20 to solve the congestion problem caused by BRC-20 on the Bitcoin mainnet. BTC is responsible for storage and STX is responsible for the synchronized development of the smart contract layer ecosystem.

3. Ordinals Protocol Inspires More Innovations

The initial Ordinals protocol brought a better NFT solution, and the more expensive thing than ordinary artworks is precious metal artworks, which adds another layer of value. It is a better issuance solution for high-value digital artworks NFTs; later, there was the momentary BRC-20 protocol, and the inscription assets spurted out; now there are more innovations, and the new “recursive inscription” unlocks more possibilities for the Bitcoin ecosystem.

5. Market Needs New Narratives

In the past, when many markets were doing well, there was a phenomenon of sector rotation. The main reason is that when market funds flow into certain concepts, other sectors appear low, so under the Fomo emotion, funds will overflow into undervalued sectors. In the process of looking for low-lying opportunities, the emergence of some new narratives will obviously highlight more attention. Obviously, the Bitcoin ecosystem meets this condition.

03 Summary

Recently, the Bitcoin ecosystem has made a lot of new progress. We have seen more and more possibilities. It not only solves the dilemma that the block producer’s income is getting less and less due to Bitcoin’s reduction, but also brings a broader space for Bitcoin’s future development. Bitcoin’s own strong consensus and market value also have the possibility of explosive growth in its ecosystem in the short term.

At present, Ethereum is hard against Bitcoin in the story of value storage, while Bitcoin is starting to encircle Ethereum in the development of decentralized application infrastructure and ecosystem. The next generation of the Internet’s metaverse, Web3 applications, has a wave of powerful infrastructure solutions, and the next decade will inevitably be exciting in the encryption field.

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