- The Bitcoin blockchain is slowly becoming more than just a buy-and-hold platform.
- Developers have been expanding its functionality, which could create new demand.
- Ethereum experienced a similar trend, leading to its massive rally in 2021, Bitget CEO Gracy Chen told Business Insider.
Bitcoin 2024 Catalysts may seem like a thing of the past.but programmers are driving the positive future behind the scenes.
For most of its existence, the leading cryptocurrency has captured the market's attention as a buy-and-hold asset, and this store-of-value appeal has generated explosive gains. Apart from this, blockchain has not offered investors much else to do.
"Despite bitcoin's various use cases, it is primarily viewed as 'digital gold' to mitigate inflation or as an alternative currency that allows participants to transact in a decentralized peer-to-peer (P2P) environment," said a Chainalysis note in March. "It usually has No "It's been seen as the blockchain to build on."
That puts Bitcoin a step behind certain competing networks, especially Ethereum. On that platform, investors have been free to transact different cryptocurrencies or gain exposure to non-fungible tokens and DeFi.
And with Ethereum's native cryptography now approved for its own set 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 for years to expand its functionality, the launch of the Ordinals protocol last year sparked new momentum. This system is what allows the blockchain to eventually host digital data beyond the bitcoin token, such as NFTs.
Then came the BRC-20 chips. Building on the Ordinals mechanism, the protocol allows tokens to be minted and traded directly on the blockchain, and new cryptocurrencies have affected Bitcoin en masse.
"The Ordinals protocol enabled the growth of memecoins on the bitcoin blockchain, causing an increase 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, have been issued," Gracy Chen, CEO of crypto exchange Bitget, told Business Insider by email.
Memecoins and NFTs may appeal more to those looking for fun for now, but this is also good news for price-conscious investors, he said. Added to this is bitcoin's foray into scaling and DeFi solutions, helping to drive transaction demand.
Although key technical differences between bitcoin and ethereum will remain, he said, replicating their functionality could see bitcoin grow fivefold in just a matter of years, Chen said.
This is based on the total value locked or the amount of assets staked in the bitcoin protocol. Currently, this metric is more or less in line with Ethereum's situation just before reaching a parabolic boom between 2020 and 2021.
In the case of Ethereum, new DeFi features and new coin launches triggered a seismic surge, with ether jumping 3,702% from its high to its low. For bitcoin, the growing adoption of BRC-20 could be the basis of its own rise, albeit less amplified:
"Despite bitcoin's higher capitalization, it may not see as meteoric growth as ETH did in 2020, given the absence of a low base effect and stricter regulatory conditions. However, even a two-fold increase weak could still result in a five-fold increase in the leading cryptocurrency's value," Chen wrote in a note.
Since its inception in March, around 67 million BRC-20 registrations has been made.
The explosive popularity has increased the profits of crypto miners, who are paid a certain fee for minting these assets. While transaction fees were rarely a primary source of revenue, the growing activity is changing the mindset of the industry, said Galaxy Mining co-head Brian Wright.
"We see these events happening, you know, probably not sustainably, but throughout the year, there will be some periods where miners may be more profitable than they thought, simply as a result of transaction fees," said. he Galactic Brain Podcast in April.
