Hey JessInvestors in alts
Bitcoin is criticized by many different people for a range of issues, but as for the altcoin lovers. They see it as a one-trick pony. Bitcoin can only do one thing send and receive transactions and do it safely and securely; not much else can be done with the token.
The coins power comes from the fact that it is really good at one thing, has loads of backers, on-ramps and decentralisation on a range of nodes, miners, dapps and exchanges leveraging the network and has been the first layer for users to get into crypto and explore the wider market.
Bitcoin is for sound money Austrian economics types; they want to store their wealth in something that cannot be debased. I get that, Bitcoin does that, and we're all grateful for it.
The supplementing and expansion of Bitcoin
The altcoin forest, however, has been a playground for new ways of interacting with one another in a trustless environment. NFT's, Tokenization, smart contracts, oracles, defi, and so much more all happening on a chain. Then there are also things like scaling chains and staking chains and a range of governance ideas. The altcoin market is more the tech/silicon valley space where you move fast and break things.
Bitcoin can't afford to be that brazen as it remains the anchor for the entire crypto space, it needs to be boring, slow and reliable. The nature of Bitcoin has opened up ideas and opportune for alts to come in and provide alternatives for those who want smart contracts, cheaper transactions and other distributed features.
The second layer is growing stronger
So we all know that Bitcoin on-chain transactions are slow and can get costly with the peak transaction cost somewhere around $50, on-chain scaling is going to be impossible, and that's why layer 2 solutions have formed around Bitcoin.
The Blockstream guys and some of the open-source community have jumped on board with the launch of the Liquid Network and the more popular consumer-focused Lightning Network. The Liquid Network is similar to wrapped tokens where you secure your BTC in a smart contract/federation and then use the pegged asset to conduct transactions with LBTC on their chain and then can cash out to the main chain when ready; this is more for large scale investors wanting to move massive volume quickly and make more efficient trades.
The lightning network aims to use a new set of nodes to create a mesh network of payment channels. The transaction can flow through to find the cheapest and fastest way other users wallet. It is also an off-chain transaction that is only secured on the main net when you close the payment channel and move coins to the main chain.
Transactions are near-instant and are charged at the sub-satoshi or satoshi level. While these protocols aren't perfect and add a new layer of complexity for Bitcoin users as well as tech that need to incorporate these advances, you can see where it's leading.
Any alts that only promised faster payments are going to get crushed if the lightning network picks up pace and adoption with exchanges, wallets and dapps.
Bitcoin is getting smarter
But Bitcoin doesn't have smart contracts and NFTs and all that cool tech that Ethereum has, and to that I say...Yet, the unlocking of layer 2 protocols on Bitcoin continues with the RGB protocol. The protocol went into beta in June of this year and may be an unknown quantity for many as the announcement didn't really make waves.
So what does RGB do?
- The second layer network plans bring smart contracts and tokenized assets to Bitcoin with a Lightning Network-esque technical design.
- RGB could be used to issue tokenize securities and nonfungible tokens (NFT), and to offer a more private means of stablecoin issuance and transfer.
RGB will be Bitcoins 3rd side chain, and it just shows the mesh effect the chain will have in a few years. If chains want to complement and work with Bitcoin, I think they can survive in certain niches, like HIVE focusing on social. However, if you're just a run of the mill general-purpose chain, I think this side chain model is going to render a lot of coins pointless.
Bitcoin has the brand, the adoption, the liquidity and the trust, building on top of it makes it easier to scale since you're already working in the most widely adopted network and could attract mode dapps and developers to use RGB and LN instead of using their own chain or one of these smart contract chains.
Bitcoin being able to issue stable coins, NFT's and smart contracts is an exciting proposition and one we should be watching out for, if RGB does take off as well as more on-ramps for Lighnint I think BTC will consolidate users and value from the market even more than it already does.
Bitcoin is getting better
Bitcoin is coming for you alts, so you better step up your game, the more features Bitcoin gets over time, the competition and heat it puts on alts to improve. Pushing alts into risker territory to try new things to out-innovate the floor that is Bitcoin.
Have your say
What do you good people of HIVE think?
So have at it my Jessies! If you don't have something to comment, comment "I am a Jessie."
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