There is a group of people who always shout “Bitcoin doesn’t need an ecosystem” in the popular Bitcoin Layer 2 era. Why is that? Who are the providers and harvesters behind the Bitcoin narrative?
If you pay special attention, you will notice that the frequency of broadcasting Bitcoin documentaries on non-volunteer TV channels has greatly increased since the Bitcoin spot ETF was approved and the BTC price reached an all-time high. For example, “The Rise of Rise of Bitcoin” is a classic film that features many young faces of crypto entrepreneurs. In 2014, Vitalik Buterin, at the age of 19, confidently talked about and presented his self-founded Bitcoin magazine in front of the camera.
In 2014, Brian Armstrong’s head wasn’t as shiny, but they had one thing in common: they always talked about how Bitcoin can replace fiat currencies and its main application is for payments.
Fast forward 10 years, back to 2024, the expected nature of Bitcoin has completely changed. The ecological density of Ethereum, which has the best chance of becoming the “Bitcoin killer,” has completely reversed users’ perception of public chains. When you open Twitter or other websites, many Key Opinion Leaders (KOLs) always complain in response to posts pumping Bitcoin Layer 2:
“Bitcoin doesn’t need an ecosystem, idiots.”
“Just let Ethereum (or XXX chain) handle the ecosystem, the ecosystem on BTC is all about scamming money.”
It didn’t take long for the supporters of BTC L2 to arrive on the battlefield, and the two sides started a community war. One side believes in the doctrine of “Bitcoin doesn’t need an ecosystem, maintaining a value preservation prototype,” mostly with the Lightning Network. The other side believes in the doctrine of “Bitcoin can carry more like Ethereum can,” creating an atmosphere of judgment on the two basic doctrines, gradually tearing the community apart.
The Bitcoin ecosystem tree, where capital picks the fruits
Let’s first summarize the development of the BTC ecosystem in the past year. The artillery fire launched by Ordinals was deafening. Although the fundamentalist faction was shouting, it couldn’t stop the BRC20 troops from following closely behind. They went from being close to a meme to completely breaking out and becoming a special corner that caught the attention of capital: Can this be done? Can we create an NFT craze on Bitcoin?
Next is Runes, making a lot of noise. After all, Casey vowed to commit seppuku as a gamble, full of gimmicks. But technically, it still borrowed from ARC20’s UTXO-based approach, a variant of NFT that lacks scalability kits and is incompatible with BitVM. It’s a race that is difficult to compare in terms of endurance. Among the enthusiastic rune users, the happiest ones are the Bitcoin miners who have nothing to do with them but see their wallets grow.
What Bitcoin really needs is which Layer 2 can have the financial narrative power, truly alleviate network congestion, reduce gas fees to a level “normal people can accept” at the smart contract layer.
The reality is discouraging. The first business card BTC Layer 2 presents to attract users is still about who provided the funding, returning to the traditional capital determinant. On the technical side, it’s even more mixed, with Bitcoin Magazine, for example, criticizing:
Using Bitcoin as a native asset:
L2 must be designed fundamentally to use Bitcoin as its primary token or unit of account, and it must have a mechanism to pay transaction fees in Bitcoin. If there are tokens, they must be backed by Bitcoin.
Using Bitcoin as a settlement mechanism for executing transactions:
L2 users should have control and be able to return assets to L1 through a mechanism (trusted or trustless).
Demonstrating dependence on Bitcoin’s functionality:
If the Bitcoin network completely fails, but the system can still operate, the system is not a Bitcoin L2.
L2s that love to issue tokens, benefiting capital. Users expect to profit from airdrops and IDOs, and making money is not a problem. The problem lies in the deviation from the technical intent.
Putting aside the fundamentalist faction of Bitcoin, the trend of Layer 2’s pursuit of benefits is mainly due to Ethereum’s experience in DeFi Summer. Protocols like Uniswap, Maker, and Aave brought liquidity into the Ethereum Virtual Machine (EVM). Furthermore, there is NFT Summer, which brought the important narrative of “multimedia” being on-chain to the new generation of young users and on-chain assets. And now, these important “liquidity revolutions” are being demanded again by Bitcoin’s ecosystem supporters! Although late, there are already examples on Ethereum, and users’ expectations are even more focused on short-term gains.
Recently, Stacks’ upgrade by Satoshi Nakamoto, Citrea’s Rollup, Botanix’s hybrid POS design, and BitSmiley’s stablecoin initiatives are all worth paying attention to.
BTC Layer 2 has become an opportunity for the market to send out a survey to users. Ultimately, market demand will decide. Besides its original dream (its political significance), where will BitEVM go in the future? The new fundamentalist faction is being formed.
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