Focusing on the future requires being prepared for new trends, and in this context, BRC-20 plays a considerably important role. We had mentioned at the end of 2021 that the Taproot update initiated a period where smart contracts could be executed on the Bitcoin network. This was exciting. So, why is BRC-20 so important for the future?
Ethereum is the largest smart contract platform by market value and is considered the most significant altcoin. Smart contracts can be likened to websites on web2. Smart contract platforms can be compared to hosting and server services like Amazon. Bitcoin is both the oldest and the most decentralized cryptocurrency network in terms of mining power.
The security, decentralization, and robustness aspects of Bitcoin indicate its potential to become a hub for smart contracts in the future. This was not possible before Taproot. Throughout 2023, the Bitcoin ecosystem developed rapidly. New asset types exemplified by Ordinals NFTs and BRC-20 tokens created widespread excitement in the community, leading to significant increases in earnings for BTC miners.
However, we have not only left behind a new turning point that will positively affect the future of Bitcoin for miners. Ordinals operate tied to Bitcoin, without requiring a single line of change in Bitcoin’s code.
The Ordinals concept, developed by Casey Rodarmor, allows for data definition on satoshis, which are one hundred millionth of a Bitcoin. NFTs were the first use case of the Ordinals protocol, but the same technology can also be used to produce fungible tokens similar to the ERC-20 tokens supported by Ethereum.
MultiBit launched a two-way bridge for BRC-20 and ERC-20 transfers, triggering a new process. Months later, we can say hello to a world where some new protocols can live integrated with BTC while operating on the Ethereum network. Furthermore, this transformation could enable Bitcoin to evolve beyond just a narrative for value storage to something that provides infrastructure services in Web3.
In the next two years, we might see new projects operating on the Bitcoin network and integrated with different networks make noise in the markets. When we talked about ZK networks in 2021, there weren’t such advanced initiatives in this area. Today, we are talking about Bitcoin contracts, and what we will see in the coming period will be surprising.
The question remains as to what investors should do. Despite being risky, following the pioneers in this field could provide them with profits. For instance, the first DeFi platform operating on (and integrated with) the Bitcoin network or other firsts. When some of these firsts succeed, they can offer good returns to early-stage investors.
