This is an opinion editorial by Zack Voell, a bitcoin mining and markets researcher.
One of the more interesting and controversial developments in the Bitcoin ecosystem is off-chain use cases. Many of these applications are not technologically identical, but they all nonetheless expand the list of potential use cases apart from the Bitcoin base layer for a given bitcoin holder. And some of these products are completely outside the Bitcoin economy altogether.
This article takes no position on the unique merits of any particular off-chain use for Bitcoin, but it summarizes some growth trends and supply data showing growth and adoption across Layer 2 protocols, bitcoin-backed tokens and more. Using bitcoin in these ways is not suited for every investor, but anyone who cares about the broad scope of Bitcoin adopters should take note of these trends to better understand where and how bitcoin are moving.
Lightning Network, Liquid Network and RSK over the past two years. It’s apparent that of these three, some are seeing supply grow faster than others. But the overall growth trajectory is markedly opposite of bitcoin’s current price action. Despite the bear market, adoption continues.
unleashing Bitcoin’s full potential,” Stacks announced its offering of a form of wrapped bitcoin in January 2021. The asset uses the ticker symbol xBTC.
Data Overview Of Tokenized Bitcoins
It’s no secret that synthetic bitcoin products on other blockchains are often derided on Twitter and not universally used or welcomed by the broader Bitcoin community. But data shows that a non-trivial amount of bitcoin investors are increasingly using bitcoin-backed tokens.
Wrapped Bitcoin (WBTC), an ERC-20 token launched by BitGo. The chart below taken from The Block shows the extraordinary growth in WBTC supply over the past two years irrespective of any downward bitcoin price action: