Tech
How Bitcoin’s technological expansion could drive 5x growth in just 2 years
- The Bitcoin blockchain is slowly becoming more than just a buy-and-hold platform.
- Programmers have expanded its functionality, which may lead to new demand.
- Ethereum has undergone a similar trend, leading to its massive rally in 2021, Bitget CEO Gracy Chen told Business Insider.
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That of Bitcoin 2024 catalysts may seem like a thing of the pastbut programmers are fueling future upside from behind the scenes.
For much of its existence, the leading cryptocurrency has attracted market attention as a buy-and-hold asset, and this store of value has led to explosive gains. Other than that, blockchain hasn’t given investors much else to do.
“Despite bitcoin’s diverse use cases, it is primarily seen as ‘digital gold’ to mitigate inflation or as a currency alternative that allows participants to transact in a decentralized, peer-to-peer (P2P) environment. “, read a note from Chainalysis in March. “It hasn’t generally been seen as the blockchain to build on.”
This puts Bitcoin a step behind some competing networks, particularly Ethereum. On that platform, investors were free to transact different cryptocurrencies or gain exposure to non-fungible tokens and DeFi.
And with Ethereum’s native cryptocurrency now approved for its own series of spot ETFs, some analysts expect these technological advantages to trigger a bull run towards it.
But bitcoin is catching up.
While programmers have been trying to expand its functionality for years, the launch of the Ordinals protocol last year provided new impetus. This system is what allows the blockchain to finally host digital data beyond the bitcoin token, such as NFTs.
Then came the BRC-20 tokens. Based on the Ordinals mechanism, the protocol allows tokens to be minted and exchanged directly on the blockchain, and new cryptocurrencies have hit Bitcoin en masse.
“The Ordinals protocol has enabled the growth of memecoins on the bitcoin blockchain, leading to a surge in liquidity within the BTC ecosystem in record time. Since the protocol’s inception, tens of thousands of BRC-20 tokens, with a combined market capitalization exceeding $2 billion, were issued,” Gracy Chen, CEO of cryptocurrency exchange Bitget, told Business Insider via email.
Memecoin and NFTs may appeal more to fun-seekers for now, but that’s also good news for price-conscious investors, he said. Added to this are Bitcoin’s forays into scaling solutions and DeFi, which help increase the demand for transactions.
While key technical differences will still remain between bitcoin and ethereum, he said, replicating its functionality could make bitcoin rise fivefold in a matter of a few years, Chen said.
It is based on the total value locked or the amount of assets staked on the bitcoin protocol. Currently, this metric is more or less in line with Ethereum’s position just before the parabolic boom between 2020 and 2021.
In the case of Ethereum, new DeFi features and new coin launches triggered the seismic rise, and ether jumped 3,702% from peak to trough. For bitcoin, the surge in BRC-20 adoption could be the basis for its own, albeit less amplified, surge:
“Despite bitcoin’s larger capitalization, it may not experience as meteoric growth as ETH in 2020, given the lack of a low base effect and tighter regulatory conditions. However, even a twice-weaker surge could however lead to a five-fold increase in the value of the leading cryptocurrency,” Chen wrote in a note.
Since their inception in March, near 67 million BRC-20 enrollments They have been made.
The explosive popularity has increased the profits of cryptominers, who are paid a certain commission to mint these assets. While transaction fees have rarely been a primary source of revenue, the increased activity is changing the industry’s mindset, said Brian Wright, co-head of mining at Galaxy.
“We see these events occurring, probably not sustainably, but throughout the year there will be some periods where miners may be more profitable than they thought just because of transaction fees,” he said. THE Galactic Brain Podcast in April.