The Tremendous Potential of Bitcoin's Ecosystem Layer2: Introduction to Blayer

TL;DR

Blockchain technology and Bitcoin have been hot topics in the fintech sector since their inception. Bitcoin, as the first and most famous cryptocurrency, has become a symbol of the digital currency market. In 2023, despite the impact of the pandemic on the digital currency market, Bitcoin continued to achieve historic milestones and significantly increased its market share. The Taproot upgrade in 2021 provided Bitcoin’s technological foundation with the possibility to embed more data on the blockchain, further fueling the entire digital currency field’s enthusiasm.

The expansion of the Bitcoin ecosystem has always been a focal point for the community. In April 2024, Bitcoin will face its fourth halving event, posing a significant challenge to miner revenue and potentially impacting the coin’s price. Facing such challenges, Bitcoin’s security and decentralization features will be tested, making the expansion of its ecosystem even more urgent.

Currently, with a market value exceeding $850 billion, Bitcoin shows immense growth potential. Taking Ethereum as an example, its ecosystem accounts for 20% of the total market value, with about $50 billion in on-chain assets. By this ratio, the Bitcoin ecosystem should have at least $200 billion in development space. However, currently, the quality assets staked in its ecosystem are only about $300 million, highlighting its growth potential.

Bitcoin, as the cornerstone of cryptocurrencies, is renowned for its security, reliability, and decentralized nature. Despite its network lacking Turing completeness, which means it cannot execute smart contracts, and its transactions per second (TPS) being significantly lower than other public chains, supporters still believe it does not need major changes. The introduction of the BRC20 protocol doubled Bitcoin’s price but also faced issues such as high interaction costs, slow confirmation speeds, and difficulties in scaling applications.

Faced with these challenges, the Bitcoin community has a preference for adopting Layer2 solutions, which process a large volume of execution operations off the mainnet, only writing the final state back to the mainnet, to increase transaction speed and reduce costs. The ideal Layer2 solution should have decentralized cross-chain capabilities, a secure and efficient second-layer network, and the ability to feed back into the Bitcoin ecosystem.

Currently, several teams within the Bitcoin ecosystem are dedicated to solving the technical challenges of Layer2. Projects like the Lightning Network, Stacks, RGB, Rootstock (RSK), and Liquid are exploring different solutions. Despite the challenges, the exploration within the Bitcoin ecosystem continues.

The Blayer protocol is an innovative BTC Layer2 solution aimed at facilitating efficient and secure transfers from Bitcoin to Layer2 in a decentralized manner. It not only provides an efficient, secure, and scalable platform for value applications but also supports using native BTC as gas fees. The Blayer protocol includes the Merkle Hash Verification Protocol (MHVP), Privacy Fragment Integration Protocol (PFIP), Mirror Consensus Protocol (MCP), and Byzantine Proof of Stake (BPOS), aiming to solve the decentralized cross-chain issues from the Bitcoin network to Layer2.

As the Bitcoin ecosystem continues to evolve, we can look forward to its further development in the global financial market and its reshaping of the entire Web3 world. Blayer aims to play a key role in promoting technological innovation while advancing the overall progress of cryptocurrency culture and community.

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