Dear Bankless Nation,
Bitcoiners didn't wait too long after last week's SEC enforcement to signal that BTC's favorable regulatory positioning was a huge reason to be bullish.
Today, we dig into ten catalysts that BTC undoubtedly has going for it right now.
- Bankless team
The Hot Narratives Fueling Bitcoin
Bankless Writer: William M. Peaster
The recent resurgence in Bitcoin's popularity is a testament to its resilience and its potential to underpin new waves of blockchain experiments. But this doesn't mean you should dive in without understanding the current landscape!
Here are 10 compelling catalysts that make buying BTC an interesting move right now. This article is available in full exclusively to Bankless Citizens 🫡
1. For the culture 🤌
In early 2018, I remember selling all my BTC and doubling down on Ethereum because then it was already alarming how Bitcoin Maximalists were rising and getting increasingly toxic.
Fast forward over five years to today and new innovations around Bitcoin have brought in creative and non-dogmatic crowds anew. At the helm of this cultural renaissance are veteran Bitcoiners like Nic Carter, Eric Wall, and Udi Wertheimer, who recently have done much to contest and take back the conversation from Bitcoin maxi pundits.
In other words, Bitcoin is becoming fun again. So with maxis not totally dominating and new experiments abounding, the culture around Bitcoin is becoming one that more people no longer have to be embarrassed by, but can actually take pride in.
The narrative has shifted from a single-minded focus on Bitcoin’s supremacy to more open-minded dialogue about Bitcoin’s potential in the broader cryptoeconomy, and that’s a catalyst for growth in more ways than one.
See our interview “Leaving the Bitcoin Religion with Nic Carter”
2. Growing demand for Bitcoin security 🔏
More teams are starting to explore how they can “checkpoint” data onto Bitcoin from another blockchain so that blockchain can inherit Bitcoin’s considerable security guarantees. This checkpointing would be done via transactions to Bitcoin, so if adopted more widely this approach could help grow usage of Bitcoin over time.
For example, the minds behind Babylon protocol are one such team that has developed a mechanism for checkpointing proof-of-stake (POS) blockchain data and beyond to Bitcoin. Set to go live on mainnet later in 2023, Babylon will initially specialize in enhancing the security of Cosmos zones.
See our previous guide on How to Get Started on Cosmos
3. Bitcoin coming to Cosmos 🌌
Speaking of Cosmos, what if you could use your BTC directly in Cosmos projects, like trading on the popular decentralized exchange (DEX) appchain Osmosis?
There are efforts to make this interchain utility possible, for example Nomic, which is building around the Inter-Blockchain Communication (IBC) Protocol to create the Nomic Bitcoin Bridge. Currently active on testnet, the fully realized Nomic network will let users use nBTC (which represents BTC 1:1) in Cosmos-based apps.
BTC becoming increasingly useful in places beyond Bitcoin is definitely a catalyst for growth going forward.
4. Bitcoin rollups 🌀
The future of the Ethereum scaling scene is rollups, and it’s increasingly looking like rollups will play a pivotal role in scaling Bitcoin over time, too.
Someone who has done amazing research here is John Light, whose primer “Validity Rollups on Bitcoin” led to an outpouring of recent attention and efforts on Bitcoin L2s. In his research, Light noted Bitcoin and validity rollups, a.k.a. zk rollups, could conceivably complement each other as a “perfect match.” Bullish!
Another team putting research into action in this arena is Rollkit, which rolled out its modular framework for launching rollups on Bitcoin in March 2023. Expect to see more Bitcoin rollups in the near future then. And just as L2s have been a catalyst for Ethereum and ETH, they’re now poised to be a catalyst for Bitcoin in kind in the years ahead.
See our previous explainer What’s New with ZKs?
5. The Ordinals NFT boom 💥
Back in January, I first introduced Ordinals to Bankless readers, and since then the “Bitcoin NFTs” protocol has absolutely exploded in popularity.
For a refresher, Ordinals is a system that converts individual satoshis, the smallest BTC denomination, into NFTs through an “inscriptions” process. It’s no gimmick, either. Ordinals inscriptions on Bitcoin are like “onchain minting” as we Ethereans would call it, albeit much more affordable than is generally possible on Ethereum.
Accordingly, over the past six months a new NFT ecosystem has bloomed atop Bitcoin with incredible intensity and rapidity. As you can see in the image above, Ordinals have helped Bitcoin become the second-most popular blockchain for NFT trading behind only Ethereum at the moment.
With the way things are going now, I don’t see this Ordinals craze slowing down any time soon. And as a person who was there for the 2017, 2020, and 2021 NFT surges on Ethereum, this 2022-2023 surge on Bitcoin is reminiscent. The ongoing culture bloom will be a huge catalyst for Bitcoin going forward.
See our previous guide How to Mint a Bitcoin NFT
6. Token experiments abounding ⚗️
The arrival of Ordinals earlier this year set off an absolute flurry of additional tokenization experiments on Bitcoin.
For example, this new thread series by Emblem Vault’s Jake Gallen (Part 1 + Part 2) detail over two dozen different proposals, standards, and experiments that have recently accelerated Bitcoin’s tokenization scene.
Among the most popular of these new resources is the experimental BRC-20 standard, which in its own way tries to actualize a system akin to fungible ERC-20 tokens on Ethereum, though, again, BRC-20 is just one of many varied tokenization experiments right now. There’s SRC-20s, ORC-20s, BRC-721s, .sats, and on and on.
The cambrian explosion of these sorts of experiments unfolding on Bitcoin is a very promising catalyst for the OG blockchain as we look ahead to the future.
7. New Bitcoin DeFi possibilities 🪙
The aforementioned boom in Bitcoin tokenization projects has led to an associated resurgence in Bitcoin DeFi efforts, a DeFi summer if you will.
Some teams that are working in this category right now are Omnisats, a DeFi primitives metaprotocol built on Ordinals, and GoldStandard, another protocol team that’s devised the GRC-20 standard in an effort to build an overcollateralized $GOLD stablecoin on Bitcoin.
Note that in general this new offshoot DeFi scene on Bitcoin is incredibly new and in many areas very primitive. Tread cautiously at first if you do decide to explore. But nevertheless, the continued rise of Bitcoin DeFi is a big catalyst indeed.
8. Rare sats 💎
The above “satributes,” a play on sat attributes, comes via ord.io, an Ordinals explorer and indexer.
People will collect what they come to see as collectible, and the rich lore of Bitcoin combined with a newfound appreciation of individual satoshis thanks to the rise of Ordinals means more and more people are starting to see unique individual satoshis as collectibles.
Some may find it silly, but it’s generally akin to the rise of “historic NFT” collectors on Ethereum. This growing collector base has contributed considerable activity to Ethereum, and sat collectors may do the same for Bitcoin over time. Bullish catalyst!
9. Improved fee market conditions 💸
The BTC supply is managed by a decreasing supply system, meaning the amount of new BTC created and able to be earned by miners is halved every four years, a.k.a. the “halving.”
This process will continue until the full 21 million BTC supply is reached in 2140. But unless the price of BTC continues to rocket up over time, this continued drop in the block rewards may make it unprofitable for miners to secure Bitcoin long before 2140 ever rolls around.
Indeed, in 2040 — 100 years before the final bitcoin is issued — the Bitcoin block reward will have dropped to 0.195 BTC per block. At that point, 20.99 million BTC, or more than 99.99% of the total supply, will have been mined. If the BTC price doesn’t compensate for this drop by itself, it will take transaction revenues — i.e. user activity — to keep Bitcoin profitable and secure.
The good news for Bitcoin? Ordinals NFTs, tokenization efforts like BRC-20s, and the resurgence of Bitcoin DeFi have been quite profitable for miners lately. These are all newer indications that Bitcoin can potentially reach the teeming blockspace market it will need to over time. This is a fundamental improvement for BTC’s long-term outlook.
10. April 2024 Bitcoin Halving 📈
No “BTC catalysts” article can be complete without direct mention of the halving, which, as the chart above suggests, has always seemingly played out bullishly for the BTC price to date. Will the upcoming April 2024 halving play out similarly, and could it be the most impactful one on Bitcoin mining so far?
We’ll have to see how things shake out from here, but there’s no question that there’s a ton of people in the cryptoeconomy who consider the halving very bullish and buy accordingly. As such, this is a catalyst that can’t be ignored!
Action Steps:
- ✅ Understand the big catalysts for Bitcoin right now!
- 🦄 Catch up on everything you need to know about Uniswap V4
- 📘 Read 8 Strategies to Balance Your Crypto Bets
The web3 ecosystem is an expansive world, full of endless opportunities for those curious enough to explore them! Head over to MetaMask Portfolio to get started, where you can view your assets in one place and discover other features such as Buy, Swap, Bridge, and Stake.