Bitcoin’s next chapter: From passive asset to financial powerhouse

For years, Bitcoin (BTC) has remained successful integer hibernation, meaning it is held tightly successful wallets and admired arsenic “digital gold,” though seldom used. According to StarkWare’s Bitcoin pb Ilia Volokh, that epoch whitethorn beryllium ending.

On the latest occurrence of The Clear Crypto Podcast, hosts Nathan Jeffay and Gareth Jenkinson excavation into what it means for Bitcoin to germinate from a static store of worth to a dynamic fiscal instrument. 

Unlocking caller usage cases

The speech centers connected however innovations similar wrapped Bitcoin and trustless bridges whitethorn unlock caller uses for the world’s astir well-known cryptocurrency.

“There is simply a phantasy that radical person that they volition enactment golden nether their mattress and that it volition someway multiply. And evidently for golden nether the mattress successful the literal sense, this is retired of the question,” said Volokh. “For Bitcoin, it’s not arsenic wide that it’s retired of the question.”

The method barrier, helium explains, is that Bitcoin’s basal protocol was intentionally designed with constricted functionality. 

Unlike Ether (ETH) oregon Solana (SOL), Bitcoin doesn’t natively enactment astute contracts oregon decentralized concern (DeFi) applications. Still, request is increasing for precisely that benignant of functionality.

“People privation to bash worldly with it, but they can’t bash that overmuch yet,” said Jenkinson. However, Volokh points to a adjacent aboriginal wherever that mightiness beryllium changing.

“We’re yet getting to a constituent wherever determination are technological innovations that let you to bash antithetic things with Bitcoin.”

Related: Is FOMO back? Bitcoin archetypal timers bargain 140K BTC successful 2 weeks

Wrapped Bitcoin FTW?

The archetypal workaround is “wrapped Bitcoin,” which lets users deposit BTC with a trusted enactment who issues a tokenized mentation connected different concatenation similar Ethereum. But this method requires giving up custody and is thing galore die-hard Bitcoiners fiercely oppose.

“For galore Bitcoiners, this is beauteous overmuch the worst lawsuit scenario… They bash not privation to judge this drawback.”

Enter the adjacent generation: trustless oregon low-trust bridges. These tools let Bitcoin holders to interact with DeFi protocols without relinquishing power of their assets.

While genuinely trustless solutions would necessitate protocol changes, specified arsenic enabling OP_CAT, a long-discussed opcode, Volokh acknowledges that taste absorption wrong the Bitcoin halfway assemblage makes this unlikely.

Still, hybrid approaches are gaining traction, peculiarly for 2 real-world usage cases: borrowing dollars against Bitcoin and generating output done BTC “vaults” managed by 3rd parties. Both are already being utilized astatine scale.

“It volition conscionable beryllium bully to link this immense chunk of superior to the remainder of finance.” - Ilia Volokh

To perceive the implicit speech connected the Clear Crypto Podcast, perceive to the afloat occurrence connected Cointelegraph’s Podcasts page, Apple Podcasts oregon Spotify. And don’t hide to cheque retired Cointelegraph’s afloat lineup of different shows! 

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