Building With Bitcoin? BTC-Built dApps Are Leading The Charge

While Bitcoin was the first cryptocurrency and has upheld a huge percentage of the total market share for the past 15 years, it is far from the most popular blockchain network to build with. Despite the success of Bitcoin, it is actually mostly eclipsed when it comes to DeFi (decentralized finance) developments, with the vast majority of applications launched being on the Ethereum network.

Due to the advanced developer toolkit that Ethereum launched with, their main goal of creating a workable ecosystem that users could develop with was incredibly successful. However, over recent months, the tides are beginning to shift when it comes to building with blockchain. Many developers are starting to see Bitcoin as a vast resource with mostly untapped potential for creating, deploying, and scaling new decentralized applications.

Especially considering the recent crypto downturn, with the vast majority of major cryptocurrencies losing large portions of their value, many investors are turning back to the original to secure their finances. While other chains may offer different building capabilities, the one thing that other cryptos cannot recreate is the fact that Bitcoin came first and is here to stay.

In this article, we’ll be taking a look at the untapped potential of Bitcoin’s base layer ecosystem, demonstrating the most recent progressions in this industry that are leading Bitcoin towards a resurgence within the building community. The research and information within this article comes directly from Bitcoin: Beyond the Base Layer which was commissioned by Trust Machines, the team building the largest ecosystem of Bitcoin applications. 

Why does Bitcoin have so much untapped potential?

As the world’s first cryptocurrency, Bitcoin has a very stable reputation, one that is reflected in the vast financial backing this currency has acquired. With a current market cap of almost $400,000,000,000, this cryptocurrency has an unmatched amount of liquidity, beating out Ethereum but trillions of dollars. 

Yet, despite this huge amount of liquidity, with investors actively seeking ways to put their BTC to use within the world of DeFi applications, there are still relatively few opportunities to do so. Equally, with the historical legacy that’s behind Bitcoin, it also has a very stable base layer that resists change. When new technology is introduced into the Bitcoin base layer, it often takes years of debating within the community, with the technology being tested, checked, and probed to ensure it aligns with the fundamental vision of blockchain.

While this stubborn resistance to change has led Bitcoin to have a slow development pathway, especially when compared to Ethereum, which modifies its technology much more frequently, it also means that Bitcoin is the perfect stable ground to build long-term projects on.

When developing on a base layer that changes frequently, there is a high chance that what you’re creating will become obsolete and outdated, thus requiring a much more intensive degree of maintenance and upkeep for developers. Bitcoin, on the other hand, is incredibly stable, with any projects that are completed on this system most likely lasting for years without the need for change.

The rigidity that made developers turn away from blockchain is now – in light of the crypto downturn and increasing instability – the very factor that’s making this an attractive system to build on. Instead of fast-paced developments with lots of turnovers, developers are turning towards Bitcoin in order to find a stable ground on which they can create apps for years to come.

What are the Advantages of Building with Bitcoin?

As a well-established cryptocurrency with trillions of dollars of market cap to its name, Bitcoin comes with a series of advantages that other blockchain ecosystems cannot offer. When comparing Bitcoin and Ethereum, many similar benefits arise. However, the following three benefits are deeply ingrained in Bitcoin’s system, with their presence making Bitcoin a wonderful place to build.

The main three benefits of building with Bitcoin are:

• Stability – As suggested earlier, Bitcoin is a legacy system that has been around for a long time. Due to this, and the network’s reluctance to make big changes, this stability is one of the biggest advantages of Bitcoin. Whatever is constructed within this ecosystem is very likely here to stay.
• Security – Bitcoin’s security is unparalleled. This system is widely considered hack-proof due to the fact that the entire network is under constant surveillance and monitoring. What’s more, 51% of attacks are unlikely due to how costly Bitcoin is and how high the total market cap is. It would be virtually impossible for anyone to get their hands on enough free capital to pull off an attack.
• Liquidity – With high liquidity, building on Bitcoin makes sense because DeFi applications would have a range of different applications of that liquidity widely disposable for them. For example, people would be able to generate yield, take out crypto-loans, or any other forward function of a high-liquidity system.

While Ethereum boasts many advantages, the legacy, history, and total value of Bitcoin place it a cut above.

How Does Bitcoin Overcome Crypto’s Scalability Issue?

One of the most common problems that arises within developing with blockchain is the scalability issue. This issue is related to the number of transactions that certain blockchain networks can process in any given second. If you want to scale an ecosystem, then more transactions will be queued every second, so you need a network that has high enough transactions per second capabilities to keep up with demand.

Bitcoin, which uses proof of work, is notoriously a slow network when it comes to transactions per second. It can only process 4.6 transactions per second, while other blockchain networks can do over 10,000. Due to the low TPS, Bitcoin has become an incredibly expensive network when it comes to scalability, as you have to pay to push your transaction to the top of the queue and ensure its processing.

This action of paying to push up the pending transactions queue is known as a gas fee, which is currently around $1 per transaction. While this may not seem like much, this is the lowest the transaction has been for over two years. Even then, when compared with other networks that offer gas fees of hundredths of a penny, Bitcoin stands out as a weaker link.

When it comes to building a decentralized application, transactions are necessary to ensure processes are carried out correctly and documented, meaning that many developers avoid Bitcoin simply due to how expensive it can be. 

However, over the last few years, a range of Bitcoin-based protocol layers have begun to work on fixing this problem. Stacks, RSK, and Lightning Network are three of these ecosystems that are building on top of Bitcoin. Their main goal is to create a layer 2 ecosystem that interconnects with Bitcoin to solve a different problem.

• Stacks – Stacks is a smart contract layer 2 ecosystem that connects to blockchain through cross-chain consensus. Smart contracts on Bitcoin are notoriously hard to navigate, with the integration of Stacks effectively solving this problem. 
• Lightning Network – The Lightning Network is a protocol that links into Bitcoin, which is specifically created to solve the scalability problem. This network can process millions of transactions per second, with its integration into blockchain allowing for rapid payments and transactions. This network records transactions off-chain, allowing the network to drive down the post of transactions. With these efforts in place, Bitcoin is about to rapidly scale, making this a fantastic building playground. 
• RSK – One of the central problems that Bitcoin faces is a lack of programmability. To solve this, RSK acts as a separate global ledger, providing a sidechain that allows for blocks to be processed in a much more efficient manner. 

While these are three of the leading layer 2 ecosystems that are building with Bitcoin, they are far from the only ones. With the additional capabilities and functionality that they afford to Bitcoin, it is rapidly converting itself into a prime candidate for developers seeking to build DeFi applications.

What Could Speed Up The Movement To Building on Bitcoin?

Demonstrated by the range of layer 2 projects that are now establishing themselves on Bitcoin, there are a variety of platforms working towards making Bitcoin a perfect ecosystem for building. While this industry has made great strides over the past decade, there are still a few core elements that would radically decrease the time it takes for this to convert into a leading building ecosystem.

While these progress points are currently underway, they still need to see more development or investment before they come fully to fruition:

• Bitcoin-based services become widespread – While there are currently a range of different ways to use Bitcoin, the creation of more use cases through the integration of BTC into different services would radically increase the interest in this network. There are many startups that are focusing on bringing utility to Bitcoin, with their development leading this blockchain ecosystem to likely flourish in the coming years.
• Incentives for building – While Bitcoin’s legacy, combined with the reasons mentioned earlier, are now pulling in more builders than ever before, a further set of incentives for building would increase the production speed on this blockchain ecosystem.
• Mining incentives – As a proof of work cryptocurrency, a continual set of miners working on the next block is required for Bitcoin to function correctly. The development of further incentives for miners would increase the uptake of this role, helping the system to thrive even with additional strain from new developments.

As these three changes and additions are implemented and developed over the coming years, we’ll likely see Bitcoin become a first-rate ecosystem for DeFi app builders.

Final Thoughts

The world of cryptocurrency is a deeply uncertain place to be, with the vast majority of different networks rising and falling as trends come and go. However, one thing that’s certain here to stay is the original cryptocurrency – Bitcoin. With its stability, alongside the wave of layer 2 ecosystems that are supplementing its weak areas, Bitcoin is quickly becoming one of the go-to developer playgrounds.

While still in relatively early stages, especially when compared to its counterpart Ethereum, Bitcoin is making impressive strides in this industry. With a huge total valuation and massive availability liquidity, it’s no wonder that people are seeing this crypto as an untapped resource. Over the next 5 years, we’re likely to see a range of developments around Bitcoin, boosting its capabilities and making it more appealing to developers.

With these changes underway, Bitcoin very well could be the leading developer playground of tomorrow.