Bitcoin
How Bitcoin’s Technological Expansion Could Boost Price Growth 5x in 2 Years
- The Bitcoin blockchain is slowly becoming more than just a buying and holding platform.
- Developers have been expanding its functionality, which could lead to new demand.
- Ethereum went through a similar trend, leading to its big rally in 2021, Bitget CEO Gracy Chen told Business Insider.
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Bitcoins 2024 catalytic converters may seem like a thing of the pastbut programmers are fueling future advantages behind the scenes.
For most of its existence, the flagship cryptocurrency has captured the market’s attention as a buy-and-hold asset, and this store-of-value appeal has led to explosive gains. Furthermore, blockchain has not offered investors much else to do.
“Despite bitcoin’s diverse use cases, it is primarily viewed as ‘digital gold’ for inflation mitigation or an alternative currency that allows participants to transact in a decentralized, peer-to-peer (P2P) environment,” he said. a note from Chainalysis in March. “It’s not typically seen as the blockchain you can build on.”
This puts bitcoin a step behind certain competing networks, especially Ethereum. On this platform, investors have the freedom to trade 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 recovering.
Although programmers have tried for years to expand its functionality, the launch of the Ordinals protocol last year provided new momentum. 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. Built on the Ordinals engine, the protocol allows tokens to be minted and traded directly on the blockchain, and new cryptocurrencies have hit Bitcoin in droves.
“The Ordinals protocol has enabled the growth of memecoins on the bitcoin blockchain, leading to 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 to $2 billion, were issued,” Gracy Chen, CEO of cryptocurrency exchange Bitget, told Business Insider in an email.
Memecoins and NFTs may, for now, appeal more to fun-seekers, but this is good news for price-conscious investors as well, she said. Added to this are bitcoin’s forays into scaling and DeFi solutions, helping to increase demand for transactions.
While key technical differences still remain between bitcoin and ethereum, she said, replicating their functionality could see bitcoin rise 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 roughly in line with Ethereum’s position just before it hit a parabolic boom between 2020 and 2021.
In the case of Ethereum, new DeFi functions and new coin launches triggered the seismic rise, and ether jumped 3,702% from peak to trough. For bitcoin, the growing adoption of BRC-20 could be the basis for its own rise – albeit less amplified:
“Despite bitcoin’s higher capitalization, it may not experience as meteoric growth as ETH in 2020, given the absence of a low base effect and stricter regulatory conditions. However, even a rise twice as weak could still result in a fivefold increase in the main cryptocurrency,” Chen wrote in a note.
Since its creation in March, close to 67 million BRC-20 registrations It has been done.
The explosive popularity has increased the profits of cryptominers, who receive a certain fee for minting these assets. While transaction fees have rarely been the main source of revenue, the increase in activity is changing the industry’s mindset, said Brian Wright, co-head of mining at Galaxy.
“We see these events occur, you know, probably not sustainably, but throughout the year, there will be some periods where miners may be more profitable than they thought they would be, just as a result of transaction fees,” he said. O Cerebro Galáxia Podcast in April.