Following the debut of US Bitcoin exchange-traded funds in January and the recent "halving" update, crypto investors are pondering what could spark the next surge in the largest cryptocurrency. Many developers believe they have the answer: enhancing Bitcoin's blockchain with programmability. Unlike Ethereum, which supports smart contracts allowing various functionalities, Bitcoin is primarily seen as a store of value without versatile utility.
Efforts to introduce programmability to Bitcoin have existed for years, with initiatives like Lightning for scalability and bridges for interoperability. However, these solutions have faced reliability issues and security concerns. Nonetheless, the emergence of Bitcoin Ordinals for nonfungible tokens and proposals like BRC-20 tokens have reignited interest in enhancing Bitcoin's capabilities. Projects like OP_CAT and initiatives by organizations such as Layer 1 Foundation and Arch are exploring ways to enable greater programmability.
Arch, for instance, plans to allow apps from other networks like Solana to operate on Bitcoin, with numerous developers already working on functionalities such as lending, decentralized exchanges, and stablecoins. Layer 1 Foundation is developing a module for the BRC-20 metaprotocol, enabling message-based computations on the Bitcoin blockchain.
While some, like Jeff Garzik, advocate for Layer 2 solutions as a more cost-effective approach, others believe that enhancing Bitcoin's programmability could lead to significant growth in decentralized finance (DeFi) applications. Currently, Bitcoin's DeFi market is much smaller than Ethereum's, but there's optimism that it could expand significantly in the coming years, potentially becoming a major catalyst for Bitcoin's future growth.