While Bitcoin has long been viewed as a secure and decentralized store of value, or "digital gold," it has to be acknowledged that its potential to support more advanced applications remains relatively untapped.
We need to think: Is there innovation in the Bitcoin ecosystem? Is it still just digital gold, or are there other application scenarios?
The answer is yes: NFT, stable currency, DeFi and other applications have all begun to appear on the Bitcoin network.
Unoptimized L1 makes dApp construction and application cumbersome and inefficient. The emergence of L2 is making some things usable and efficient. Build applications on L2 and realize value on L1.
The emergence of L2, such as Stacks, Lightning Network, and RSK, makes Bitcoin about to open up new possibilities.
L2 presents a huge opportunity to leverage Bitcoin’s massive user base and capital pool, and as more developers and users move towards them, so does Bitcoin’s potential to become a hub of innovation and creativity.
Why should you be concerned now?
The Bitcoin community has historically resisted change, often clinging to an "extremist" mindset that Bitcoin should be kept simple and serve only one purpose: a decentralized digital store of value.
This way of thinking has led some to worry and question the long-term security of Bitcoin. They argue that relying on "rising prices" as a long-term security argument is not sustainable. In order to protect the Bitcoin network, Bitcoin miners must have sufficient incentives to continue mining, otherwise the entire network will be at risk of failure.
Every four years, the number of bitcoins distributed to miners is halved. This event is known as the "halving". Historically, halving events have spurred bitcoin price spikes, which means miners are still happy to keep mining. Miners receive fewer bitcoins but 2x, 3x, or even 10x in value!
"Rising digital currency prices" is not a sustainable long-term security model. For this to happen, the bitcoin price needs to double at least every four years. If Bitcoin price doubled every time it halved, its price would exceed the total global M2 money supply in just two decades. As long-term security challenges became apparent, many community members took a more agile approach, embracing creativity and innovation.
The launch of Ordinals (an NFT protocol) and the growing popularity of the Bitcoin Naming Service (BNS) on Stacks' L2 are prime examples of the new Bitcoin culture movement. Below we explore these examples in more detail!
At the same time, we must take into account that the most important event on the Bitcoin calendar is just around the corner. Halving has always been a point of time that everyone is paying attention to. To date, the only way to gain access to this event is to buy Bitcoin. However, with new creativity and innovation happening in the network, more applications will emerge.
Ongoing Innovation on Bitcoin
Stacks
Stacks is a Layer-1 blockchain solution designed to work with the Bitcoin network. It can execute smart contracts and create decentralized applications (dApps) on the Bitcoin blockchain, extending the functionality and utility of the network.
Most of the new innovations that appear on Bitcoin use Stacks on the backend.
BNS
The Bitcoin Name System (BNS) is innovating the way people interact with Bitcoin addresses. Just like Domain Name Service (DNS) made the Internet more user-friendly by converting complex IP addresses into easy-to-consume text, BNS converts complex wallet addresses into a human-readable format.
Ordinals
Thanks to previous security upgrades, users are now able to record data on a Satoshi, effectively creating an NFT, so developers rushed to build their own collections of NFTs on the Bitcoin network.
Ordinals has capitalized on this new craze and created a protocol that allows users to create, buy and sell Bitcoin-backed NFTs. They are now the protocol of choice for projects looking to issue NFTs on the Bitcoin network.
Trustless Computer
Trustless Computer empowers developers to build decentralized applications on top of Bitcoin. With Trustless Computer, developers can build various dApps such as DAOs, DEXs, NFTs, tokens, auctions, lending platforms, storage solutions, and more.
With transactions like Taproot, it is now feasible to embed any data into the Bitcoin blockchain, ensuring permanent storage on the Bitcoin network and inheriting its properties such as accessibility and immutability. Trustless Computing is working towards a Turing-Complete virtual machine running on the Bitcoin network.
