The idea of ​​Bitcoin (BTC) mining ideas from another blockchain may seem ridiculous.

The idea of ​​Bitcoin (BTC) mining ideas from another blockchain may seem ridiculous. Bitcoin is the one that started it all. It was copied and served as inspiration for Litecoin (LTC), Dogecoin (DOGE), Monero (XMR), and Ethereum (ETH), to name a few.

But a lot has changed over the past 15 years. Although Bitcoin’s dominance has remained constant, the industry has moved beyond simply “buy and hold” currencies whose profitability depends on the purchase of other currencies. Today, there are many ways to deploy digital assets to generate investment returns, generate revenue, and just have fun.

While much of this innovation has come from Ethereum and the resulting multi-token, multi-chain landscape, the pendulum is swinging back towards Bitcoin. Now equipped with its second layer, native tokens, non-fungible tokens (NFTs), and decentralized finance (DeFi) protocols, Bitcoin has the opportunity to experience explosive growth in active users, total value locked (TVL) and active wallets.

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Can Bitcoin replicate the explosive growth trajectory that Ethereum experienced in 2017 and 2020, driven by the ICO and DeFi craze? Taking a leaf out of Ethereum’s playbook, Bitcoin has the potential to experience explosive growth over the coming years – if Bitcoin developers work to adopt some of Ethereum’s features.

Ethereum selling points

The most important thing is interoperability. Ethereum’s multiple tokens have seen enormous success, in part due to global standards. ERC-20s are virtually ubiquitous and can be easily moved between EVM chains. In contrast, Bitcoin suffers from competing token and registration standards whose acceptance is at the discretion of each platform.

Some prefer the BRC-20 standard. Others prefer Runes, developed by Ordinals creator Casey Rodarmor. Cursed inscriptions are a completely different branch. Bitcoin has a set of competing and overlapping standards for issuing tokens, and its L2 ecosystem is equally complex.

Stacks is the largest Bitcoin L2, unless you count the Lightning Network, but there are now dozens of other networks vying to become the ultimate Bitcoin scaling solution, including EVM applications. Some are sidechains, some are L2s, and some appear, at best, to have only a tangential connection to Bitcoin. This is all very confusing.

If Bitcoin is going to host DeFi, NFTs, real-world assets (RWA), and all the other on-chain use cases that developers of other use cases try to impose on it, it needs to become like Ethereum. This doesn’t mean settling for proof of ownership or changing your core code base every six months. Instead, it calls for the adoption of global standards that allow value to flow freely across chains.

If Bitcoin developers can work together instead of formulating ideas separately, its ecosystem has the potential to grow exponentially in every meaningful metric, from daily active users to TVL. To achieve this, Bitcoin will become not only the world’s largest cryptocurrency in 2025, but also the world’s largest multi-token ecosystem.

Total Value Locked (TVL) describes the value of assets held on the blockchain storage and decentralized finance protocol, and is a good starting point for comparing the Ethereum and Bitcoin ecosystems. TVL is an imprecise measure because it is possible to “double count” repackaged assets in multiple protocols. However, it provides a benchmark for measuring network activity and overall liquidity.

Time value is locked on Bitcoin and Ethereum. Source: Devilama

Bitcoin’s $1.15 billion TVL pales in comparison to Ethereum’s more than $65 billion — and that doesn’t include the billions on other EVM chains, all of which are tightly integrated with the main chain . However, it is clear that Bitcoin’s TVL is currently at the same level as Ethereum’s was four years ago, before the “DeFi Summer” triggered the Cambrian explosion of economic activity and inspired crazes like yield farming, algorithmic stablecoins, and new tokens and liquidity models like Ampleforth and OM.

History doesn’t repeat itself but it rhymes

Ethereum was at the height of the ICO craze in 2016 – but none of the new assets launched that year did the same on Ethereum. Twelve months later, this figure had increased to over 50%, with over 75% of the value of all crypto assets in existence as of mid-2017 based on Ethereum. The temptation to compare the current growth of Bitcoin assets with the Ethereum tokens of that era is overwhelming.

By 2020, Ethereum ICOs had largely disappeared as regulators began cracking down on token sales. But Ethereum has reinvented itself, envisioning decentralized finance (DeFi) and also becoming the network of choice for another emerging craze: NFTs.

By 2024, Ethereum’s NFT sector has significantly declined in value and volume, exacerbated by rising network fees and the growth of L2s, providing users with cheaper ecosystems to ply their trade. But as the success of Bitcoin Ordinals has shown, NFTs are not dead: they have simply been renamed. The most popular Bitcoin Ordinals pool, NodeMonkes, now has a market cap of over $150 million, and the Ordinals sector saw volume of over $50 million on March 3, a yearly high.

Daily ERC-20 token transfers between January 2018 and April 2018 Source: Etherscan

For a long time, the cryptocurrency community considered BRC-20 tokens insignificant compared to Bitcoin. However, as the number of these digital assets increases, so does network activity. Compared to Ethereum’s history, we can expect a similar increase in transaction demand.

Current daily trading data for BRC-20 tokens is similar to statistics and trading activity patterns for ERC-20 tokens in 2018, with an average daily trading volume of approximately 300,000. The average price of ETH for this period was about five times lower than this. average.

BRC-20 transactions between 2023 and April 2024. Source: Dune Analytics

Having 14,000 tokens built on this technology adds value to BTC in the eyes of users. This factor could counterbalance the impact of the speculative element and double the wealth of Bitcoin holders.

Bitcoin is on the cusp of a parabolic breakout

Could Bitcoin be on the cusp of a similar parabolic breakout? Current on-chain metrics make a compelling case. The market cap of all BRC-20 tokens now exceeds $2 trillion, an increase of over 250,000% in less than a year. At the same time, the growth of tokenization – the process by which unique assets such as ordinals are created on the Bitcoin blockchain – has been equally rapid.

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There have been over 66 million registrations on the Bitcoin chain so far, with over 6.8 BTC spent in fees in the process, or over $466 million. The total number of registrations has doubled since October. It’s easy to draw parallels between the origins of Bitcoin and the ICO craze that saw the multi-token era of Ethereum take off in earnest in 2017.

ETH saw its price increase tenfold between early 2020 (less than $200) and mid-2021 ($2,000 and beyond) thanks to the development of the booming DeFi sector. After that, a positive feedback loop emerged: the growth of ETH made DeFi more attractive, thereby boosting demand for this cryptocurrency. Judging by the TVL chart data, Bitcoin is now the point where Ethereum began its active growth in 2020. As DeFi increasingly relies on BRC-20 tokens, which could begin to supplant its competitors, Bitcoin will respond positively to these changes due to increased demand.

Despite Bitcoin’s high market capitalization, it may not grow as fast as Ethereum in 2020, due to the lack of a weak fundamental effect and stricter regulatory conditions. However, even a small increase can cause a significant change in value.

Bitcoin developers would do well to copy Ethereum’s tasks by paying attention to the innovations that have served as catalysts for this blockchain over the better part of the last decade.

Gracie Chen He is a guest columnist for Cointelegraph and CEO of cryptocurrency exchange Bitget. She is also a delegate to the United Nations Conference on the Status of Women. She holds a bachelor’s degree from the National University of Singapore (NUS) and an MBA from the Massachusetts Institute of Technology (MIT). She previously held leadership roles at Fortune 500 company Accumulus and venture-backed virtual reality startups VR SPACE and ReigVR.

This article is intended for general information purposes and is not intended and should not be relied upon as legal or investment advice. The views, thoughts and opinions expressed herein are those of the author alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

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