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I know this topic is a difficult one to discuss with some parts of the bitcoin community but I am going do my best to make a compelling argument as to why it is essential for the BTC community to further develop L2's and a flourishing defi ecosystem on BTC.
As for me I am a simple hodl'r who's been around since 2015 or so. I own a few small miners in my home. Planning on finally running a node in the near future (can anyone shill me some good ones?)
The case for why L2's/defi must be adopted on BTC (and why BIP 300 should at least be considered by the community)
a. There is clearly a market demand for defi products. Looking at BTC dominance over the past 5 or so years it has been slowly falling ever since the boom of ETH/alts (currently 49.1% as we speak). People actually do want defi protocols and to be able to do things with their assets aside from hodling. It's better for those users as well as the BTC community as a whole if they are able to do it with/on BTC.
b. These products do not and should not be on BTC L1 or at all interfere with the tokenomics, security, or decentralization of L1. BTC imo has firmly established the role of "store of value" in the only space and I don't think it makes sense to do anything that could harm that status. However, if the BTC community is concerned with keeping/capturing additional market share, I think there is a strong incentive to develop a L2 environment.
c. Satoshi even envisioned defi/l2 development on BTC. He was actually fairly bullish on a multi-chain world and imo it's better if those chains are associated with BTC than some other alt with inferior security/decentralization/tokenomics.
d. If BTC can develop a great L2 space there is crazy incentive for alt defi users to move to BTC. If you have a comparable or even better user experience than on ETH,/SOL but you can also actually hold your assets in BTC, which is by far the best store of value in this space, it would be crazy not to do so. I own both sol and eth bags and would happily dump them if there was a way to use BTC defi and get meaningful yields.
e. Some might argue there is already a defi space on BTC. The current defi landscape on BTC is pretty bleak to say the least. Sovryn, Rootstock, Mint etc have very low TVL/usage or liquidity. They just did not catch on. My guess is A) bridging is difficult, B) UX is not as good as on alts, and C) there is not much talk about it on the crypto space. (If I'm missing some new developments in the last year or two please share)
f. BIP300 is not a perfect proposal from the noob understanding that I have, however I do think 1) time is of the essence, 2) it is a good proposal to start with (not sure how much worse the miner risks are than other BIPs that have passed) and 3) people who are saying it's garbage or "not btc" should at least be proposing exactly what they would change about the proposal or propose something else.
The bottom line is I believe it's absolutely necessary for BTC to develop a top-tier L2/defi system in some form and swallow up as much liquidity from these other markets as possible. If the community does not act swiftly and decisively I do think we will see further BTC dominance decreases in the years to come.
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Imagine a future where the fiat system has been reset to a fully digital set of currencies and in order to be allowed access to the financial system you must take booster shots for the remainder of your life. Imagine that you also believe deep within the core of your soul that sacrificing your bodily autonomy to your government in exchange for financial services is a moral abomination and you refuse to partake in this. Cash has also been fully removed in this future and so debit cards or trad-fi bank accounts are going to be the only options. If you woke up in this dystopian future with your current BTC stash and no access to trad fi, how would you go about trying to regain some sort of purchasing power?
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Hi all,
Not sure if this is the right place for this but I'm wondering what progress is/has been made on building defi infrastructure for BTC. Specifically things like collateralized loans and yield farming. I'm familiar with project like sovryn but I'm particularly curious about non-custodial collateralized loans and cross chain swaps. Are there any good resources for these things and what is the status on the security levels? I know atomic.loans had to shut down due to security flaws in their contracts but I'm unaware of any other platforms.
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That also doesn't change anything about bitcoin's fungibility as a currency. 1 bitcoin is always 1 bitcoin whether it is virgin coin, mixed coin or a "regular" coin when you want to use it as a currency not in some centralized service like for trading.
Bitcoin is not fungible. There is already a pool that only mines "clean" transactions. Of course, it doesn't matter much yet for its small hash rate and the only block I know they've mined was not perfectly "clean" too (by their rules), but it can be a dangerous trend for 5 or 25 years from now. Monero is fungible, hence it's a problem for governments and it faces a lot more barriers Bitcoin had. It's still difficult to foresee what will its future look like, if any. XMR needs to get it's UX/UI better and I think it would have serious potential. It's just too much of a pain to transact with for the average Joe who has little-to-no tech skills. It's a great piece of tech though. One thing that's for sure is that the tentacles of the trad banking system are going to try to wrap themselves around BTC more and more in the coming years. I just hope the devs and people working on BTC are aware of that and thinking about what adjustments or upgrades the protocol might need in order to maintain it's initial vision of sound money outside of any centralized control. Saylor even hosted a meeting with Elon and N. America BTC miners to try to move towards a "greener" mining opperation. https://twitter.com/michael_saylor/status/1396915801492439044?s=20 |
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Great post.
Are there any other options outside of just staying off of exchanges/avoid KYC. Any resources or articles to better protect your privacy while using BTC?
Use Tor, use mixers, use Bitcoin Core. Important to note that your privacy leak may or may not be related with Bitcoin. No such thing as anonymity in Bitcoin, even if the users were to be careful with their activities, it would be the best to assume that Bitcoin is pseudonymous at best. There are far too many possible privacy leaks with users even if they were careful enough; potential spy nodes on the network, possible leaks through mixers with their heuristics, etc. Bitcoin was never really designed to provide anonymity from the start and all the current implementation only helps to maintain the privacy of the user. As mentioned, CoinJoin, mixers all helps with the privacy. Confidential transactions has been proposed as well, which helps with privacy but at the expense of higher resource requirements. What is the main argument by the community not to provide an additional layer of privacy onto Bitcoin? There've been scaling improvements, fee cost improvements, and some small privacy improvements (coming soon). I assume the technology is available to add additional privacy to the protocol through zk proofs or something of the like. |
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But it is missing this one crucial component that is an essential human right and even more necessary today than it was a decade ago, privacy.
It depends on how you an dealing with your bitcoin, if you learn about privacy and how to maintain privacy while using bitcoin, you will then realize that Bitcoin is not a privacy-depriving coin. You can have your privacy. I'm curious if privacy can be done in a way such that it protects the identities of the transactions (both in terms of btc address and personal identity) while still preserving the open-ness and transparency of the current system?
The normal way Bitcoin transaction do works is that the transaction are not linked to individuals but can be tracked/traced on blockchain. If you have your privacy, use Bitcoin in a way people will not link your Bitcoin transactions to your real identity, only the Bitcoin will be seen on blockchain but no one can be able to trace it to you. Is that not privacy enough. But, nowadays, people like to make use of centralized exchanges, fill in their personal information, if there is a data breach on such exchanges, will the Bitcoin not be linked to the users? It would definitely be linked to the users. If use Bitcoin on decentralized platforms, and use noncustododial wallet, able to make use of your coin control and spend wisely, making use of mixers. If you know all these, you will know Bitcoin can be used in a privacy way. About the links above, know that bitcoin can be bought directly (direct p2p), it can be bought on decentralized platforms like Bsiq and Hodlhold. It can be hard for someone to do this the first time, but it is what to be done for privacy reasons. Great post. Are there any other options outside of just staying off of exchanges/avoid KYC. Any resources or articles to better protect your privacy while using BTC? |
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