Bitcoin is experiencing a technological expansion that one expert predicts will lead to 5x growth in just 2 years.

Lauren DeCicca/Getty Images; Jenny Chang-Rodriguez/BI

• The Bitcoin blockchain is gradually becoming more than just a buy-and-hold platform.

• Programmers have expanded its functionality, which could lead to new demand.

• Ethereum saw a similar trend, leading to its massive rally in 2021, Gracy Chen, CEO of Bitget, told Business Insider.

Bitcoin 2024 catalysts may seem like a thing of the pastbut programmers are powering the future behind the scenes.

For most of its existence, the leading cryptocurrency has attracted market attention as a buy-and-hold asset, and this appeal as a store of value has led to explosive gains. Other than that, blockchain hasn’t offered much else to investors.

“Despite bitcoin’s diverse use cases, it is primarily viewed as either digital gold to mitigate inflation or as a monetary alternative allowing participants to transact in a decentralized peer-to-peer environment (P2P),” said a note from Chainalysis in March. “It hasn’t generally been seen as the blockchain you can build on.”

This places bitcoin behind some competing networks, notably Ethereum. On this platform, investors are free to transact in different cryptocurrencies or gain exposure to non-fungible tokens and DeFi.

And with Ethereum’s native crypto now approved for its own set of spot ETFs, some analysts expect these technological advantages to trigger a bull run towards it.

But Bitcoin is catching up.

While programmers have been trying to expand its functionality for years, the launch of the Ordinals protocol last year provided further momentum. It is this system that allows the blockchain to finally host digital data beyond the bitcoin token, such as NFTs.

Then came the BRC-20 tokens. Building on the mechanism of ordinals, the protocol allows tokens to be minted and exchanged directly on the blockchain, and new cryptocurrencies have minted bitcoin in droves.

“The Ordinals protocol has enabled the growth of memecoins on the Bitcoin blockchain, leading to increased liquidity within the BTC ecosystem in record time. Since the protocol’s inception, tens of thousands of BRC-20 tokens, with with a combined market capitalization exceeding $2 billion, were issued,” Gracy Chen, CEO of cryptocurrency exchange Bitget, told Business Insider via email.

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Memecoins and NFTs might appeal more to those looking to have fun for now, but it’s also good news for price-conscious investors, she said. Added to this are Bitcoin’s forays into scaling and DeFi solutions, helping to drive transaction demand.

Although key technical differences remain between Bitcoin and Ethereum, she said, replicating its features could cause Bitcoin to rise fivefold in just a few years, Chen said.

This is based on the total value locked, or the amount of assets staked on the Bitcoin protocol. Currently, this metric roughly matches where Ethereum was right before experiencing a parabolic boom between 2020 and 2021.

In the case of Ethereum, new DeFi features and new coin launches triggered the seismic rise, and ether surged 3,702% from peak to trough. For Bitcoin, the growing adoption of BRC-20 could be the source of its own – albeit less amplified – surge:

“Despite bitcoin’s higher capitalization, it may not see as meteoric growth as ETH in 2020, given the lack of a low base effect and stricter regulatory conditions. However, even a twice as weak surge could still result in a five-fold increase in the leading cryptocurrency’s value,” Chen wrote in a note.

Since their creation in March, nearly 67 million BRC-20 registrations have been done.

This explosive popularity has increased the profits of cryptocurrency miners, who receive a certain amount for creating these assets. Although transaction fees are rarely a primary source of revenue, the strong activity is changing the industry’s mindset, said Brian Wright, Galaxy’s co-head of mining.

“We see these events happening, you know, probably not in a sustainable way, but throughout the year there will be periods where miners might be more profitable than they thought just because of mining fees. transaction,” he said. THE Galactic Brain Podcast in April.

Read the original article on Business Insider

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