Source: CNBC
Compiled by: BitpushNews Yanan
On the eastern slope of San Jose, California, 17 programmers from Magic Eden , a well-known Bitcoin NFT trading platform, are gathering for a week-long hackathon to prepare for the upcoming Bitcoin halving. The office space of these employees is also a bit special - they rented a spacious, 4-bedroom, 3,875-square-meter house through Airbnb.
Much of the discussion about the Bitcoin halving, which occurs every four years, focuses on the change in the issuance of Bitcoin. However, the Bitcoin halving also coincides with several other major developments on the blockchain, including cutting-edge programming innovations that will attract more developers and more venture capital money into the Bitcoin ecosystem.
Unlike past halvings, the price of Bitcoin, the world's largest cryptocurrency, has soared to over $73,000 in March, setting a record high, thanks to inflows from the newly launched Bitcoin spot ETF in the United States.
“Bitcoin has never been more vibrant than it is today — what was missing before was a vibrant developer ecosystem,” said Zedd Yin, co-founder and COO of Magic Eden.
Arcade Games and Liquor
Although Magic Eden's temporary home for programmers is simply furnished, it also provides many thoughtful services to support the work and life of the programmer team.
Their daily "work perks" include classic arcade games like Teenage Mutant Ninja Turtles and Street Fighter in the living room and a DIY open bar on a foldable plastic table in the dining room.
More importantly, these engineers have a big advantage when they participate in hackathons - they know what they are doing. A few days before the halving, Yin, 33, gathered the team in this house in Northern California. The team has a clear goal: to build the best market trading platform for a new wave of digital products on the Bitcoin blockchain. This Monday morning, Magic Eden Rune Platform officially went online, further consolidating its position as the leading Bitcoin new product trading platform.
For years, competitors such as Ethereum and Solana have been competing fiercely with Bitcoin in terms of blockchain functionality with their native support for smart contract functions. Smart contract functions allow developers to write programmable code snippets, bringing more possibilities to blockchain applications. As a result, developers from all over the world have flocked to these blockchain platforms to build various applications.
Last year, a Bitcoin programmer named Casey Rodarmor completely disrupted this situation by introducing Bitcoin's version of NFTs, now widely known as Ordinals . This innovation was used by developers as the basis for tokens issued based on Bitcoin (called BRC-20 tokens). The launch of Ordinals did not attract much attention at first, but eventually brought Casey Rodarmor huge praise.
Late last Friday night, just as Bitcoin was halved, Rodarmor launched his latest masterpiece, Runes. Runes are essentially an upgraded version of BRC-20 tokens with superior performance.
“People have a lot of respect for Casey and think he captured that fleeting spark,” said Nic Carter of Castle Island Ventures . “So expectations are very high for Rune.”
From a technical perspective, Rune simply implements the issuance of exchangeable tokens on the Bitcoin base chain. These tokens can be stablecoins, meme coins, or any other type of exchangeable tokens.
For developers, it is crucial that Runes are more efficient than the current BRC-20 token standard. BRC-20 has attracted a lot of attention as a widely used exchangeable token standard on Bitcoin. Having a widely accepted and recognized token standard is considered the key to unlocking the scale of Bitcoin decentralized finance ( DeFi ). DeFi is a decentralized system parallel to the traditional banking system, which is automatically executed through code, cutting out middlemen such as lawyers and banks.
“Fungible tokens are integral to important ecosystems like Ethereum and Solana, so Runes is undoubtedly an important step forward for Bitcoin,” said Yin, who previously oversaw all institutional trading products at Coinbase .
Bill Barhydt , founder of Abra , runs a company that provides miners with a range of services including automated liquidation and access to macro data for the entire industry. He said that Bitcoin's own blockchain architecture (Layer 1) cannot achieve full scalability. The core of the problem is that Bitcoin's blockchain lacks built-in smart contract capabilities, which is a capability required to build a complex financial ecosystem like Ethereum or Solana.
“BRC-20 tokens, Ordinals and advanced Runes, as well as sidechains like Stacks and DeFi on Bitcoin, all show strong potential in terms of user adoption. They will significantly increase demand for Bitcoin block space and adoption, and are expected to further drive Bitcoin price growth in the coming years,” Barhydt said.
Barhydt further noted: “The level and progress of new development work currently taking place around Bitcoin is truly amazing.”
Venture capitalists agree.
“In my entire career, I’ve never seen such an aggressive pace of trading in the bitcoin space,” Carter told CNBC.
Bitcoin L2 surges in attention
Indeed, over the past few months, venture capital firms have seen a notable increase in interest in these second-layer Bitcoin projects.
According to PitchBook data, in the fourth quarter of 2023, the transaction value of the cryptocurrency industry rose for the first time in nearly two years, reaching US$1.9 billion, an increase of 2.5% from the previous quarter. Although there is still a big gap from the high of US$31 billion in 2021, funds are gradually flowing back to the field, showing that the market's interest and confidence in Bitcoin are recovering.
“The second layer space in bitcoin has definitely sparked interest,” said Muneeb Ali, co-founder of Stacks, an open-source blockchain network that is bringing smart contract capabilities to bitcoin.
As a blockchain network independent of Bitcoin, Stacks can work with Bitcoin. When Bitcoin was halved, Stacks also completed its own upgrade, reducing the transaction time to 5 seconds. Compared with the 10 to 30 minutes of block processing time of the Bitcoin base chain, Stacks' efficiency has been significantly improved.
Ali stressed that the attention of a large number of venture capital firms further confirms the view that "the Bitcoin ecosystem is ready for growth." He also revealed that in the past six months, the number of projects launched based on Bitcoin has rapidly increased from 6 to more than 50, showing that the speed of project launches is also accelerating.
A recent report released by Austin-based venture capital fund Trammell Venture Partners pointed out that Bitcoin startups have experienced explosive growth in the pre-seed round of financing, with the number of transactions surging 360% year-on-year.
“Founders are now more willing to focus on Bitcoin development,” Christopher Calicott, the fund’s managing director and founding partner, said of the findings.
In addition, the report also shows that the total financing amount of early-stage startups focusing on Bitcoin will be close to US$1 billion between 2021 and 2023.
For example, Alpen Labs is applying the advanced scaling technology of zero-knowledge proof to Bitcoin and has begun to become active in the market. Recently, they received $10.6 million in financing led by Ribbit Capital . Another highly anticipated second-layer solution, "Build on Bitcoin" (BOB for short), also successfully obtained $10 million in seed round financing.
Ali said: "Innovative technologies such as Ordinals and BRC-20 tokens that emerged in 2023 have fueled the rapid momentum of Bitcoin before the halving. They have revitalized Bitcoin's appeal and proved that users will prefer Bitcoin-based NFTs, assets, and applications if given the opportunity."
Decentralized Finance (DeFi) on Bitcoin
Developers have been trying to add additional functionality to Bitcoin’s base chain for years. Barhydt told CNBC that demand for decentralized finance (DeFi), especially yield and lending features, is a key driver of cryptocurrency adoption.
Take sidechains like Stacks as an example. They have been working to introduce Solana-like transaction speeds and competitive transaction costs into the Bitcoin ecosystem to alleviate the congestion problem of the main chain and promote the expansion of the entire Bitcoin economy.
The launch of Runes provides these existing projects with a new growth tool. Through Runes, these projects are expected to connect to the native lightweight token system on the Bitcoin main chain without having to create their own independent token environment.
“Rune provides an efficient system that makes it possible to create and manage fungible tokens directly on Bitcoin. Compared with other token standards, Rune can avoid blockchain bloat and enhance scalability,” said Hong Fang, President of OKX Exchange. “This is of great significance for expanding Bitcoin’s second-layer solutions and sidechains.” Hong Fang has worked at Goldman Sachs for nearly ten years and has extensive experience.
Ali of Stacks refers to the period after the halving as “Bitcoin Season 2.”
“The key to Season 2 is that builders are coming back to Bitcoin. Users are finally starting to differentiate between Bitcoin as an asset and as a payment instrument,” he said.
During the week-long hackathon, Yin and his team made another important discovery: Airbnb listings must be strictly screened in the future.
The house they rented was equipped with a malfunctioning outdoor gas fireplace, which caused the whole house to be filled with the smell of suspected gas leaks. In addition, the house's WiFi was out of service on the first day and was completely unusable. To make matters worse, someone in the team was infected with the new coronavirus.
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