Why Startups Are Front on Bitcoin Base Layer for Building the New Age of dApps?

Go through our article & know why startups are turning towards Bitcoin base layer for building the new age of dApps, as we have stated all in detail.

It’s no secret that dApps and Blockchain-oriented businesses have taken the world by storm these past few years. However, Ethereum, Solana, and the like have started to crop up issues. These Blockchains have been facing issues with security and uptime while being overwhelmed with the number of their users.

When startups look for a base layer Blockchain to build upon, they look for a secure, reliable foundation. This means a strong proofing algorithm and uptime as close to 100%. A recent report by Trust Machines, one of the most promising startups in the space, shows that Bitcoin might be just what they’re looking for.

What Is a Base-Layer Protocol, and Why Is It Important?

The Base layer or layer 1 Blockchain is a Blockchain like Bitcoin, Ethereum, or Solana and their underlying infrastructure. These layer 1 Blockchains can validate and finalize Blockchain transactions without needing another network. Layer 2 protocols, on the other hand, are generally more scalable but rely on another network for security and a consensus protocol. These are your Polygons, your Arbitums, your xDai Chains.

Layer 2 chains are used because they aren’t as restrictive in building complex applications and generally have a higher capacity for scaling than their layer 1 counterparts. Similarly, due to Bitcoin’s large transaction times, you’re unlikely to be able to build a satisfying game directly on top of it. However, the layer 2 chain does open additional avenues for threats to waltz through, making the layer’s security even more important.

A high-quality layer 1 chain is necessary for most applications is the need for a secure and reliable way to validate and finalize transactions. If a layer 1 chain can be attacked or brought down, all the layer 2 chains relying on it will fall together. This, in turn, means all applications relying on those chains will experience difficulties.

Bitcoin, in particular, stands out here, as its base protocol takes weeks, months, or sometimes even years to go from proposal to implementation. That is because the community has a long, rigorous discussion process every time a proposal is made. They ensure the changes would be safe and that they align with the chain’s core values.

Why Weren’t Applications Built on Bitcoin Already?

So, if Bitcoin is so secure and reliable, why didn’t we now see an onslaught of apps built on Bitcoin? Unlike Ethereum, Solana, or Cardano, Bitcoin was never made to host apps on its base layer. Bitcoin was supposed to be a censorship-resistant, P2P means of settling payments.

Bitcoin uses a simple, Turing incomplete architecture. The Turing incompleteness of Bitcoin makes it a simpler architecture and helps it decrease its complexity and number of vulnerabilities. This makes it a fairly cumbersome system to build applications upon. 

Another issue of Bitcoin is its base layer’s low throughput. Although Bitcoin’s PoW (Proof-of-work) consensus mechanism ensures the security, decentralization, and immutability of each transaction, it also heavily impedes the number of transactions that can happen each second. Today, Bitcoin processes 5-7 transactions a second, far lower than most layer 1 chains.

How Bitcoin-Based Apps Are Rising Despite the Challenges?

The same report released by Trust Machines shows that a massive amount of BTC is being transported to ETH for use in dApps through bridges. This greatly exceeds the BTC transported through lightning networks over a similar time period. Since bridges introduce an additional layer of insecurity and risk, that shows a certain degree of demand for Bitcoin-native applications among Blockchain users.

Some of these applications (at least the simpler ones that can function in a touring-incomplete environment) will be built directly on the Bitcoin base layer. This is especially likely for finance-oriented apps, which will benefit greatly from Bitcoin’s $575 billion market cap and massive liquidity.

However, most apps will use layer 2 protocols on top of Bitcoin, such as Lightning Network or Liquid. These protocols all address certain problems within Bitcoin, whether it be the difficulty of programming applications or the low throughput. Some more unique solutions, such as Stacks, don’t link to Bitcoin as a traditional layer 2 protocol.

Stacks is a layer 1 protocol connected to Bitcoin through its consensus mechanism – proof of transfer. This enables Stacks to utilize Bitcoin’s base layers to their fullest while providing DeFi applications, smart contracts, and even NFTs to its userbase.

This is extremely exciting, especially with firms like Trust Machines working on creating tools to make developing smart contracts easier using Stacks. This will allow developers to have an easier time developing apps on Bitcoin and will, in turn, drive in more users.

Why Startups Are Flocking to Bitcoin?

With layer 2 solutions, Stacks, and the like doing a great deal to resolve Bitcoin’s major issues, the question of what makes Bitcoin so valuable to build on remains open. We touched a little on this when talking about base layer protocols, but Bitcoin is incredibly secure and reliable. This means attacks like those that happened to Ethereum are nigh-impossible, and massive downtimes like the ones experienced by Solana are also incredibly unlikely.

This makes apps built on Bitcoin inherently more stable and trustworthy – two extremely important assets to have, especially with dealing with users that have vested a large amount of their wealth into Bitcoin.

On that topic, since Bitcoin is the most popular cryptocurrency with the highest market capitalization, users are more likely to have Bitcoin already around to spend on dApps and smart contract interactions. Today, users lose thousands due to fees when transferring Bitcoin into Ethereum (or another cryptocurrency). If these users could jump to a DeFi marketplace that runs natively on Bitcoin so they could evade those fees, they would do so in a heartbeat.

Finally, Bitcoin’s base layer is very stable and gives its users peace of mind regarding base layer changes. Other chains like Ethereum are already looking to simplify their base layer into something more akin to Bitcoin, so why not use Bitcoin instead? Even rollups, one of the main ways Ethereum scaled itself, seem possible on Bitcoin.

Closing Words

While traditionally speaking, Bitcoin isn’t the best chain to build apps on, Web3 has shown time and time again that traditions are meant to be broken. The base layer of Bitcoin provides extreme stability and security unmatched by its largest competitors, such as Ethereum.

As the report provided by Trust Machines shows us, there’s a great untapped demand for Bitcoin-native applications. However, until the advent of Layer 2 protocols like Liquid and Lightning Network, there was no way to tap into that demand due to how Bitcoin is designed.

Today, some developers are even stepping away from these Layer 2 protocols and embracing more creative solutions like Stacks – a way to get the benefits of Bitcoin’s base layer while embracing the future of DeFi, NFTs, and most importantly, the smart contracts that make it all possible.

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