A group of developers believes introducing programmability to the Bitcoin blockchain could drive the next rally for the largest cryptocurrency.
While Bitcoin is currently seen as digital gold, with its primary use being a store of value, developers argue that the addition of programmability would unlock a range of functionalities and applications.
Unlike its rival Ether, which allows for the creation of smart contracts and the development of decentralized applications on the Ethereum network, the Bitcoin blockchain lacks the ability to support such features.
Over the years, developers have attempted to address this limitation by creating “Layer 2” networks like Lightning, aimed at scaling Bitcoin for payment applications.
However, many of these solutions have proven unreliable, and the associated bridges, used to transfer tokens between networks, have been susceptible to hacks, leading to user apprehension.
Developers Work on Enhancing Bitcoin’s Programmability
Despite the lack of widespread adoption for payment purposes, developers have recently made progress in enhancing Bitcoin’s programmability.
Projects like Bitcoin Ordinals, which enable the creation of non-fungible tokens by embedding data onto satoshis (the smallest denomination of Bitcoin), have paved the way for further advancements.
The introduction of BRC-20 tokens, proposed by an anonymous developer named Domo, has sparked a search for ways to enhance Bitcoin’s programmability even more.
Proposals like OP_CAT, a potential software upgrade to the Bitcoin network, are being considered to facilitate easier implementation of programmability.
Startups like Arch, which recently raised $7 million in funding, and the Layer 1 Foundation are actively working on solutions to enable greater programmability in Bitcoin.
Arch aims to run an application platform on top of Bitcoin, potentially allowing apps from the Solana network to be ported onto Bitcoin.
The Layer 1 Foundation is developing a programmable module for the BRC-20 metaprotocol, which enables the storage and execution of code on the Bitcoin blockchain.
These initiatives have attracted the interest of around 20 developer teams who are building apps for borrowing, lending, decentralized exchanges, stablecoins, and more.
TVL on Bitcoin DeFi Market Amounts to $1 Billion
While some members of the Bitcoin programming community remain skeptical about the future of Bitcoin’s programmability, believing that Layer 2 solutions will prevail, these new ventures are betting on the potential influx of decentralized finance (DeFi) apps on Bitcoin.
Currently, the total value of tokens locked in the Bitcoin DeFi market amounts to about $1.1 billion, significantly lower than Ethereum’s $52.7 billion.
However, proponents of Bitcoin’s programmability envision a future where the Bitcoin DeFi ecosystem could rival or surpass Ethereum’s, potentially driving significant growth in the crypto market.
It is worth noting that some analysts have turned bullish on Bitcoin following weeks-long consolidation.
Leading trading firm QCP Capital has expressed optimism about Bitcoin’s price momentum, forecasting a potential return to the highs of $74,000.
In a recent note, the firm said it has observed substantial buyers acquiring 100,000 to 120,000 BTC Calls for December 2024, indicating confidence in the upward movement of the cryptocurrency.
Likewise, technical analyst Rekt Capital believes that Bitcoin has emerged from the post-halving “danger zone” and entered an accumulation phase, as indicated by weakening selling pressure.
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