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Ethereum is the best platform for Bitcoin

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Over the years, a variety of complementary protocols have been developed for Bitcoin, such as the Lightning Network for payments or Liquid Network for commerce. But to date, the most popular off-chain platform used by Bitcoin, ironically, comes from the hand of its main rival: Ethereum.

Tokenized Bitcoins”Allow users to transact in Bitcoin in Ethereum’s Decentralized Finance (DeFi) ecosystem. Instead of using Ether (ETH), the native currency of Ethereum, these values ​​are used.

Camila Russo, freelance writer and author of the book “The Infinite Machine”On Ethereum and its advances, it investigates more in the subject. Mention what Ethereum projects, including Wrapped Bitcoin (wBTC) and The Tokenized Bitcoin (imBTC) they hold 70% more Bitcoin than Lightning or Liquid.

“Ethereum was designed to be ‘more flexible’, this allows tokenized protocols to thrive.”

Camila Russo

Although the supply of tokenized Bitcoin has grown 330% so far this year, it is noteworthy that the total amount of BTC contained outside its native Blockchain is small. Only 8,285 BTC are held, which is equivalent to a value of $ 79 million, compared to 18.4 million issued since 2009.

Some projects based on the Ethereum platform are complementary

Kiarash Mosayeri, product manager in the BitGo wallet, is a faithful believer that some tokenized Bitcoins are complementary to other protocols:

“WBTC represents a digital asset (Bitcoin) in the Ethereum chain, and is truly complementary to Lightning.”

Kiarash Mosayeri

Comparative graph of the supply of BTC off-chain in protocols based on Bitcoin and Ethereum. Source: CoinDesk
Comparative graph of the supply of BTC off-chain in protocols based on Bitcoin and Ethereum. Source: CoinDesk

In January 2019, Mosayeri helped propel wBTC in its launch. He implies that “growth in Ethereum-based protocols outside of Blockchain will drive adoption and increase network effect for Bitcoin, attracting more developers to the platform

Additionally, Matt Luongo, CEO of Thesis, who launched the tBTC token, declares his stance on tokenized protocols. Notes that “Both approaches offer different functionalities and security factors (…) I am a big fan of Lightning Network, and I think it will become increasingly relevant in commerce.

Olivia Lovenmark, a former member of BitGo and Thesis, also agrees that both types of off-chain protocols are important:

Tokenized protocols like tBTC and wBTC may be more attractive as they extend a Bitcoin’s holder’s financial options, while non-token protocols like Lightning generally improve network infrastructure

Also, several finance analysts insist that there is an interest in creating and obtaining more advanced functions that may not be feasible on the Bitcoin Blockchain. Similarly, one of them is Jack purdy, a decentralized finance analyst at Messari:

Ethereum has an incredibly diverse set of financial apps built in (…) This is just the beginning, we will see many more use cases as the market for Bitcoin on Ethereum continues to grow.

Is this beneficial for Bitcoin?

Indeed, whether it is in Ethereum or Bitcoin, it is clear that the recent growth of such protocols suggests that users want to operate in Bitcoin.

In accordance with Christian decker, engineer and researcher at Blockstream (company that launched Liquid Network) “interest in using Bitcoin in other Blockchains is a strong sign that interest in it is increasing

And you, do you agree with the benefits? Would you give the Ethereum platform a try? Let us know in the comment box.



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