Special Report: Bitcoin’s growing ecosystem and capability as a layer 1 network is the narrative to watch in 2024, reports Bitget – one of the world’s leading crypto exchanges and web3 platforms.

While there’s been a lot of focus on Bitcoin (BTC) late this year with building hype and expectations surrounding potential approval of spot BTC ETFs in the US in 2024, one thing that perhaps tends to fly under many crypto onlookers’ radar is the growing utility of Bitcoin as a layer 1 network.

With their numerous altcoin narratives, such as DeFi, gaming, AI, RWAs and more, Ethereum, Solana, Avalanche and other layer 1 smart contract platforms garner most of the attention when it comes to ecosystem plays.

However, Bitget believes it’s actually Bitcoin’s burgeoning network of projects that will power the next big surge in the market.

 

‘The engine for the next bull market’

“Given the future macroeconomic environment and market conditions, the Bitcoin ecosystem presents a promising outlook,” wrote Bitget Research in its newly published Bitcoin Report 2024.

“Not only do popular cryptocurrencies like BTC and ORDI have significant potential for appreciation, but there will also be new opportunities for 100x coins within the Bitcoin ecosystem,” it continued.

In an up-and-down year for NFTs, for example, the trading volume for Bitcoin NFTs (known as Ordinals inscriptions in the Bitcoin universe) has absolutely surged at times in the latter half of 2023. That said, Bitget notes its current scale remains relatively small, which indicates “anticipated potential for over 100x growth in the future”.

Meanwhile, Bitget’s analysts also expect that the Lightning Network – a layer built on the Bitcoin blockchain to facilitate high-speed transactions and decrease congestion – will boost broader adoption of Bitcoin payments “in the short to medium term”.

 

Six Bitcoin ecosystem predictions

Right then, prediction time. Because it’s that time of the year, and why not?

  1. Increased Bitcoin ecosystem usage could help surge the price of BTC past its all-time high and to as much as US$100k.
  1. ORDI, which has become the Bitcoin blockchain’s leading “memecoin” will rank in the top 30 by market cap in the next crypto bull market. If you believe the coin can become as successful as Ethereum memecoins Shiba Inu and Dogecoin, then the potential is there for growth equalling 6-13x or more.
  1. The size of the Bitcoin NFT (aka inscriptions) market will grow by more than 100x.
  1. Opportunities for 100x coins will appear on protocols such as Ordinals, Atomicals, or Taproot assets.
  1. “In the short term, the Bitcoin ecosystem will retain the ‘one project, one protocol solution‘ status, fostering a variety of Bitcoin protocols. In the long run, a BTC ‘virtual machine’ will emerge within the ecosystem, unifying developer compile environments.”
  1. The Lightning Network will be the largest technical foundation supporting the continued adoption of BTC payments, with more assets to be issued on it.

 

Some headwind factors worth noting, however

Bitget’s research also pointed out that Ordinals – Bitcoin NFT “inscriptions” – have actually caused the Bitcoin network some headaches at times, as they occupy considerable block space, which increases congestion on the blockchain and increases the complexity of using the network.

“These hurdles require collective attention from the community and developers,” notes Bitget’s analysts.

Bitcoin currently has limited scalability, therefore is prone to bottlenecking issues as the ecosystem grows.

Adding to potential developmental roadblocks are the fact that Bitcoin’s core developers are “mostly conservative”, says Bitget, meaning they tend to have reservations about building out various new Bitcoin protocols.

As for the Lightning Network, the exchange’s research arm cautions that setting up and maintaining channels on it is more complex than conducting simple Bitcoin transactions, with an understanding of how to open, manage and close channels being a necessity.

This means the barrier to entry for usage of the Bitcoin payment network is still reasonably high for the moment.

 

But here’s more good news – miners benefit

Just regarding Ordinals again, Bitget says the protocol has actually boosted Bitcoin miners’ earnings over the past three months – significantly so.

The research team says that, since the launch of the Bitcoin Ordinals protocol, the proportion of earnings from on-chain fees have risen gradually from 1.7% in August to a peak of 19.57% on November 10.

“These improvements to miners’ earnings will, in turn, lead to further support for the BRC-20 asset class [similar to ERC-20s built on Ethereum, which are essentially Ethereum-based ‘altcoins’] and the Bitcoin ecosystem from the heavily capitalised miner community.

 

Bitget Wallet’s support for growing ecosystem

Regarding the exchange’s latest analysis, Bitget MD Gracy Chen said:

“This in-depth report is an invaluable source, providing historical insights into the development of the Bitcoin network and unique perspectives on potential future scenarios.

The profound insights from the report will play a pivotal role in guiding Bitget’s comprehensive plan for product and platform enhancement.

“Bitget remains steadfast in its commitment to supporting and advancing these trends within the evolving Bitcoin ecosystem and the Web 3 industry.”

To back up Chen’s words there, the Bitget Wallet, which we wrote about not long ago here, is placing a good deal of its focus on expanding its support for the Bitcoin ecosystem.

For now, the wallet offers functionalities such as providing support for BTC asset management, cross-chain swaps, and on-ramping, as well as Taproot compatibility and asset transfers for BRC-20 tokens and NFTs.

The aim, however, is to enhance the wallet’s technological infrastructure and product features, including increased investments in key areas such as Lightning Network, Nostr and Taproot Assets, BRC-20, and ARC-20 inscriptions.

This article was developed in collaboration with Bitget, a Stockhead advertiser at the time of publishing. 

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.

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