This year, the Bitcoin ecosystem has become a hot topic of discussion. Bitcoin was created by Satoshi Nakamoto in 2008 with the original purpose of establishing an electronic transaction system that did not rely on trust to combat inflation. Although Bitcoin has slower transaction speeds, it is viewed as a store of value. In 2014, Ethereum came into being, aiming to solve the shortcomings of Bitcoin in daily transactions, providing faster transaction speeds and a wider range of application scenarios. Bitcoin and Ethereum together have led two bull and bear market cycles.

The success of Ethereum has inspired many people and hopes that the Bitcoin ecosystem will also develop. In this regard, different opinions have emerged in the market: one side believes that more development should be carried out on the Bitcoin network, while the other side believes that Bitcoin should maintain its original design and, as a store of value, should use other Layer 1 networks such as Ethereum. Square, Solana, etc.) as more application scenarios.

In the current bull market cycle, I am personally attracted to the applications of the Bitcoin ecosystem. The Bitcoin ecosystem may become one of the important narratives driving the bull market. There are many aspects worth discussing in the Bitcoin ecosystem, including the Rune project, which has recently caused heated discussion, the NFT project on the Bitcoin chain, and the Layer 2 project on the Bitcoin chain.

Why has the Bitcoin ecosystem received heated discussions during this cycle?

In this cycle, the reason why the Bitcoin ecosystem has become the focus of heated discussion is that we can find some answers from the technical and environmental levels.

Technical level

The Bitcoin network has been criticized for network congestion, which results in slow transaction speeds and high transaction fees. In the past, transaction fees during periods of network congestion could even reach $20 to $100 per transaction, and transaction times would take 45 minutes to an hour.

In order to solve the above problems, Lightning Labs launched the beta version of Bitcoin’s second layer network — Lightning Network on the Bitcoin mainnet in 2018 and began practical application. Although there are also many security issues, but For the public, it also breaks their existing thinking and can use other methods to improve the slowness of the Bitcoin chain.

Inspired by the Bitcoin Lightning Network and Ethereum Layer 2, many projects hoping to improve the Bitcoin network have found new ways out. They established a second-layer Bitcoin network and were compatible with the Ethereum Virtual Machine (EVM), creating the latest second-layer Bitcoin network. This solution not only solves a long-standing problem with Bitcoin, but also attracts funds on Ethereum and improves user experience.

Environmental level

The fact that the Bitcoin ecosystem has received such heated discussions during this bull market cycle is closely related to the environmental cycle of the crypto. First and foremost, the main reason is that Bitcoin is about to undergo its halving, which means that the rate at which Bitcoin is produced will be cut in half, making it even rarer. In addition, the successful adoption of Bitcoin ETF has also attracted a large amount of funds into the market, making Bitcoin one of the safest assets with the highest potential. These factors indirectly promote people’s development and participation in the Bitcoin ecosystem.

In addition, the fact that the Bitcoin ecosystem can bring such a high degree of discussion has a lot to do with the gradual weakening of Ethereum’s performance. Ethereum, as the Layer 1 main chain, has always received widespread attention and has gone through multiple market cycles in the crypto. However, Ethereum still has room for improvement on a fundamental level. During the peak of the bull market, Ethereum’s high Gas Fee and slow transaction speed became impossible to ignore. Even if there were many Layer 2 projects to help, the performance of the Ethereum main chain was not as good as the Bitcoin chain. This has led some users to turn to the Bitcoin ecosystem and invest funds in Bitcoin applications.

From a currency standard perspective, Bitcoin’s status is obviously higher. When Bitcoin’s currency price performance is better than that of Ethereum, and even the main chain speed and Gas Fee are better than Ethereum, investors tend to invest funds in Bitcoin. In addition, crypto has always followed the principle of “investing in the new token, not the old token”, and the Bitcoin ecosystem is more novel than the Ethereum ecosystem, which has also brought more discussions to it.

How long can the Bitcoin ecosystem last?

Regarding the question of how long the Bitcoin ecosystem can last, the current situation shows that this ecosystem is gradually expanding and developing, and attracting a lot of investment and attention. Recently, many Bitcoin second-layer network projects have announced their own financing information, which shows investors’ confidence and interest in the Bitcoin ecosystem.

• BTC L2 project BEVM completed tens of millions of dollars in financing, with ArkStream Capital and others participating in the investment
• Bitcoin Layer 2 infrastructure Bitlayer Labs completes US$5 million in seed round financing, led by Framework Ventures and ABCDE Capital
• Bitcoin second-layer network BOB completes US$10 million in seed round financing, led by Castle Island Ventures
• Bitcoin Layer2 project AINN Layer2 completed a new round of financing, with participation from Waterdrip Capital and others
• Bitcoin DeFi developer ALEX completes US$10 million in strategic financing, led by Spartan Capital

As can be seen from the above information, various Bitcoin Layer 2 projects have received millions or even tens of millions of dollars in financing, and many well-known venture capital institutions have participated. This shows that investors are optimistic about the potential and development prospects of the Bitcoin ecosystem. I personally believe that the Bitcoin ecosystem will perform very well with this bull market cycle.