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Tuesday, December 7, 2021

Blockchains: Know The Real Value Of The Tech Behind Bitcoin

The real value is not encompassed in the digital coins, their codes and transactions, it is stuck with the currency’s economy. Behind the leading cryptocurrencies of the time, there is the ever-evolving blockchain tech that helps push the economy further.

Analysts are currently looking into two kinds of possibilities. They want to know whether the value (in terms of market capitalization and price) lies in Layer 1 which consists of the major coins like BTC and ETH or Layer 2 (L2). They further note that value keeps shifting between these layers and also moves into application protocols built on L1. They predict that L1 is becoming nothing but rails with an attached fee. If that is the circumstance, analysts note that most of the value will gradually move into use-specific blockchains and agnostic protocols.

Blockchain Tech Has Evolved Over Time

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During the nascent stage of cryptocurrency, the approach was a little different. Bitcoiners of the time used a single blockchain and a single platform to power their currency-use cases. But people soon started looking at the technology beyond the single currency. This led to the development of “Bitcoin 2.0.” Bitcoiners realized while working on Bitcoin 2.0 that they can use L2 to create an environment of decentralized finance. During the 2015-2019s, Bitcoiners went through, what was called, the ‘Sandbox Period,’ while working on Ethereum. This further led to the invention of DeFi.

Such inventions completely stripped Bitcoin of its earlier status and left it as a currency that was to be mined like gold. Currently, there are several use-specific blockchains as it is almost impossible to find one that fits all. Blockchains are increasingly going for niche markets. This happens after they understand “blockchain for everything” is an improbable idea.

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