This has been a rollercoaster of a year. Between world events, politics, financial markets, and technology advances, it has honestly been hard to keep up with it all. Amazing feats have been accomplished, and terrible tragedies have occurred. And through it all, the financial markets have responded, reacted, and essentially reflected what has happened. The traditional markets have spiked and dipped accordingly, but no market has had nearly as much attention as Bitcoin. This digital currency is a unicorn in its own right, showing the world that for the first time, money does not need a government to back it to hold value, be stable, and stimulate trade. This period will mark a bright spot in the history books as the moment currency showed that it could stand on its own, with blockchain as the technology to make that possible. If blockchain can guarantee the validity of digital currency, can guarantee ownership, and can safely move it from wallet to wallet, then there is no reason it can’t be as strong as any other currency across the globe. More so, its borderless nature allows it the freedom to move unencumbered, creating new and exciting opportunities that we are still working to discover. Its recent spike toward 100k is just the latest show of confidence for Bitcoin, indicating that we are ready to expand beyond the traditional (and often restrictive) currency model.
While this is revolutionary in its own right, what is fascinating about Bitcoin is what it can do beyond a traditional currency role. Being a digital currency is nice, but using the power of that currency can yield some very interesting results. Specifically, Bitcoin can use its power and that of the blockchain that holds it to leverage entire ecosystems. Let’s dive in and see how Bitcoin is evolving beyond a simple currency, showing how in general the blockchain has massive potential, and with specific cases such as SatLayer, it can create entirely new business models.
Bitcoin: The Waking Giant
An interesting behavior of the larger blockchain industry has been the creative growth just about everywhere—except Bitcoin. Ethereum has created a massive ecosystem of L2 chains, dApps, tokens, and markets. There are many millions of people across the globe using blockchain every day, for activities like staking, token-as-ownership proof, the security and validation of data, and the creation of decentralized communities with shared visions. Many other L1 chains have built up their ecosystems, each with countless uses from the trivial to holding billions in value. The point is, that we as a society continue to develop ways to leverage the unique traits of blockchain, and digital currency as well, to accomplish new tasks and solve previously impossible problems. Just looking at the advances in Multi-Party Computing (MPC) have revolutionized what we can accomplish with people we don’t know or trust, generating verifiable results, without having to give up personal information.
Why hasn’t Bitcoin evolved the same way? After all, its value has been by far the highest of all cryptocurrencies, and the stability of the Bitcoin chain is unparalleled. Part of the issue is Bitcoin’s Proof of Work (PoW) consensus, which moves slowly and does not scale. It’s meant for security, not speed or capacity. However, we are finally seeing movement in the Bitcoin ecosystem thanks to several platforms establishing L2s on the Bitcoin chain. This unlocks speed, and scalability, and allows full ecosystems to be established. The true benefit of this is that they can essentially access the massive value that is Bitcoin, which works to secure these ecosystems through staking, rewarding, and creating liquidity.
One of the strongest examples of this new leveraging of Bitcoin is the Bitcoin Validated Service (BVS), a model that takes key lessons from the larger blockchain ecosystem and applies them to the enormous untapped value of Bitcoin. This architecture is especially interesting because it can solve two major challenges that occur in blockchain platforms. First, as it builds up a collection of individuals who want to stake their Bitcoin to the platform for rewards, this allows new dApps that are building on the SatLayer service (which developed the BVS) to access the staked Bitcoin immediately. dApps can suffer when they launch if they don’t have enough collateral to truly protect their platform from bad actors. Tying to a service like this brings enough Bitcoin value that those staking it can flex their economic muscles and ensure the distributed validation (the core of what ensures information is true and above board) acts in good faith. Those who stake Bitcoin to the BVS are rewarded, but they have to ensure those validators working the platform are trustworthy, or they risk losing their stake. This complex web of incentives, motivations, and risk is what balances blockchain overall, and when the value is secured by none other than Bitcoin, those motivations to act in good faith are as solid as they can be. Using Bitcoin as a foundational layer of security aligns the motivations of all the people involved, even though they are scattered across the world, and interacting with smart contracts. This is the beauty of decentralization, and the BVS model is proving to show a balanced approach backed by the strongest and most underutilized digital currency on the planet.
Looking Ahead
The world is going to continue with spikes and dips across geopolitics, war, economics, and more. We can’t control that, and the only sure thing is that this new year is likely to be as turbulent as the last. What we can control is how we operate in the storm, and the evolving uses of Bitcoin are showing just how stable entire economies can be when secured by something as powerful as the world’s top cryptocurrency. We will see this new world continue to evolve, finding more and more use cases as we unlock utility within the Bitcoin chain. Expect to see not only Satlayer evolve, but many other organizations develop their methods to leverage Web3 in ways we’ve never seen. This new year might have its ups and downs, but it should certainly be exciting and innovative.
