Bitcoin developers highlight ‘programmability’ as key driver for next rally

What will drive the next rise in Bitcoin? Many crypto investors have been asking this question since the launch of US Bitcoin exchange-traded funds in January and last month’s recent halving event.

Many developers think they’ve found a game-changer by adding programmability to the Bitcoin blockchain. Right now, Bitcoin is usually seen as digital gold—valuable but not very useful beyond that.

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While Ethereum lets you swap coins or earn interest through smart contracts, Bitcoin has been behind in these areas. It doesn’t have built-in support for decentralized apps or smart contracts that can run directly on the blockchain.

Read More: Senate overturns SEC rule, allowing banks to officially custody Bitcoin and crypto

Bitcoin’s evolving programmability sparks hope

Developers have tried to fix some of Bitcoin’s design problems. One big effort has been creating Bitcoin Layer 2 networks, like the Lightning Network, to handle more transactions, especially payments. But, some of these solutions have not worked well.

Is #Bitcoin DeFi and Layer 2 the Next Trillion-Dollar Opportunity? $BTC

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— Karan Singh Arora (@thisisksa) May 14, 2024

Also the software bridges that move tokens between networks have been hacked, causing users to be cautious. Many Bitcoin holders, or “hodlers,” prefer to keep their tokens as a long-term investment, hoping prices will rise.

Bitcoin’s price has struggled without something new to boost investor interest. The original cryptocurrency has fallen from its all-time high of nearly $74,000 in March. This shows the need for a new spark to keep the market moving.

Recent changes in the Bitcoin world have grabbed attention, especially with the arrival of Bitcoin Ordinals. This new method lets users create non-fungible tokens by embedding data directly onto satoshis, the smallest units of bitcoin. After this, Domo’s anonymous developer introduced BRC-20 tokens, using the same technology to issue tokens on the Bitcoin network. This has sparked a wave of excitement among developers, who are now keenly finding ways to make Bitcoin even more programmable.

Bitcoin developers are exploring numerous proposals, like the OPCAT software upgrade, aimed at simplifying the integration of programmability into the Bitcoin network. Notably, the Layer 1 Foundation, which includes contributions from a team involving Domo, is at the forefront of this innovation.

The startup Arch has made significant strides by securing $7 million in funding led by Multicoin Capital. According to Kyle Samani, co-founder of Multicoin Capital, this breakthrough represents a substantial advancement for Bitcoin, promising enhanced user experiences.

Arch is proud to be building and innovating in the Bitcoin ecosystem, alongside some of the industry's top funds and strategic partners.

Announcing the closing of our seed round led by @multicoincap, hear what they have to say about us:

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— Arch Network (@ArchNtwrk) May 9, 2024

Arch, a new platform that works directly on Bitcoin’s Layer 1, will likely be available to all developers soon, according to CEO Matt Mudano. This platform will enable apps to be moved from the Solana network to Bitcoin. Mudano shared that about 20 developer teams already use Arch to create apps that allow borrowing, lending, trading, and stablecoins.

Meanwhile, the Layer 1 Foundation is leading the creation of a programmable module for the BRC-20 metaprotocol. This metaprotocol uses coded messages directly on the Bitcoin blockchain. An indexer finds these messages and runs the required computations, similar to how Ethereum’s smart contracts work. Because Bitcoin’s block confirmation times are longer—10 minutes instead of Ethereum’s 12 seconds—there is more time to carry out these computations.

Eril Ezerel, founder of Best in Slot, an ordinals aggregator and explorer, sees this as a chance to innovate in the crypto world. He calls it the second chapter in crypto and believes it raises crucial questions about the future of blockchain. Though easier to create, these metaprotocols can be enough for many financial applications and could significantly change the crypto market.

The Bitcoin programming community has mixed opinions about its future. Jeff Garzik, a former Bitcoin core developer and co-founder of Bloq, believes that Layer 2 solutions will be more successful. Garzik thinks using Layer 2s for transactions can save money compared to running apps directly on the Bitcoin network.

According to DeFi Llama, the Bitcoin DeFi market currently has about $1.1 billion in locked tokens, which is much less than Ethereum’s $52.7 billion. However, developers are hopeful. They think that this new ability to program on the Bitcoin network could lead to many new DeFi applications.

Toby Lewis, founder of OrdinalsBot, believes Bitcoin’s DeFi ecosystem could become the biggest in crypto. He predicts its market cap could hit trillions of dollars in the next few years.

If this demand materializes, it could be the growth catalyst that Bitcoin investors eagerly anticipate. Bitcoin’s evolving programmability is seen by many as a key driver for the next big surge in the crypto market.

References:

• https://www.bloomberg.com/news/articles/2024-05-19/bitcoin-developers-tout-programmability-as-the-catalyst-for-the-next-rally
• https://multicoin.capital/

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