Bitcoin, the pioneer of cryptocurrencies, has inspired numerous other blockchain projects such as Litecoin, Dogecoin, Monero, and Ethereum. However, the cryptocurrency industry has evolved significantly over the past 15 years, with new opportunities for earning yield and generating revenue emerging. While Ethereum has been at the forefront of this innovation, Bitcoin is now catching up with its own layer-2 solutions, native tokens, NFTs, and DeFi protocols. By adopting certain features of Ethereum, Bitcoin has the potential to experience exponential growth in active users, total value locked, and active wallets.
One of Ethereum’s key strengths is its interoperability, which has been facilitated by universal standards like ERC-20 tokens. In contrast, Bitcoin has struggled with competing token and inscription standards, making it challenging for value to flow freely between chains. To become a home for DeFi, NFTs, and other on-chain use cases, Bitcoin needs to become more like Ethereum by adopting these universal standards. By working together and embracing interoperability, Bitcoin’s ecosystem can grow significantly in terms of daily active users and total value locked, making it the largest multi-token ecosystem in the world.
When comparing the ecosystems of Ethereum and Bitcoin, Total Value Locked (TVL) is a useful metric. Currently, Ethereum has over $65 billion in TVL, while Bitcoin’s TVL stands at $1.15 billion. However, when looking at the historical growth of Ethereum, Bitcoin’s TVL is at the same level Ethereum was four years ago before the DeFi boom. This suggests that Bitcoin has the potential for similar growth if it embraces the right features.
History has shown that Ethereum experienced explosive growth in its ICO phase, with more than 75% of the value of all crypto assets based on Ethereum by mid-2017. While Ethereum’s ICO craze has declined, it reinvented itself with DeFi and became the network of choice for NFTs. Similarly, Bitcoin’s NFT sector may have declined, but it has rebranded with projects like NodeMonkes gaining popularity. The existence of 14,000 tokens built on Bitcoin technology adds value to BTC and has the potential to multiply the wealth of BTC holders.
Currently, the market cap for all Bitcoin tokens stands at over $2 trillion, with a significant increase in inscriptions on the Bitcoin blockchain. This growth in inscriptions is reminiscent of Ethereum’s ICO craze. As decentralized finance increasingly adopts Bitcoin tokens, Bitcoin will react positively to increased demand and can experience significant value growth.
While Bitcoin may not experience the same meteoric growth as Ethereum due to its higher capitalization and stricter regulatory conditions, even a small surge could lead to a substantial change in value. Bitcoin developers should take inspiration from Ethereum’s innovations and embrace the features that have catalyzed its growth over the past decade.
Overall, Bitcoin has the potential to become the largest multi-token ecosystem globally if it adopts the right features and works towards interoperability. By learning from Ethereum’s success, Bitcoin can position itself for explosive growth in the years to come.
Gracy Chen, CEO of Bitget, is a guest columnist for Cointelegraph. She holds a bachelor’s degree from the National University of Singapore and an MBA from MIT. The views expressed in this article are her own and do not necessarily represent the views of Cointelegraph. This article is for general information purposes and should not be taken as legal or investment advice.