Can Bitcoin Adoption Occur Without Layer 2? History Disagrees
From the recent launch of Bitcoin-based exchange-traded funds in the U.S. to El Salvador’s plan to raise US$1 billion through BTC bonds to fund its “Bitcoin City” property development, growing mainstream adoption of the world’s original cryptocurrency is demanding increased scalability.
Adam Back, a Bitcoin development veteran and CEO of blockchain technology company Blockstream, which is working in partnership with El Salvador’s government on its Bitcoin-backed bond plan, says the solution lies in layer-2 networks.
“While it’s difficult for (all) potential users of Bitcoin to directly hold it on chain, there are different use cases that can use it in different ways.” Back told Forkast.News in a video interview. “[Layer 2] provides a different kind of section of transactional capacity optimized for use cases.”
Watch Back’s full interview with Forkast.News Editor-in-Chief Angie Lau to learn more about layer-2 solutions, the “block war” between layer-2 providers, the Bitcoin Taproot upgrade and BTC’s mainstream adoption.
02:00 Digging Bitcoin’s roots
09:07 Is this the hedge?
13:10 Layer-2 growth
15:17 El Salvador
21:48 Innovating on Bitcoin
33:03 Bitcoin never sleeps
35:35 Bitcoin’s present and future
45:07 What would Satoshi say?
The impact of adoption:
“If the adoption curve continues, it could reduce the monetary premium in other things — in the stock market, in real estate, in gold and artwork… things that people look to to preserve value. And that could be positive. I think that over-monetization of real estate, for example, makes real estate unaffordable for the average person, and that reduces their enjoyment. So I think that could be in both directions.”
El Salvador’s bet on Bitcoin:
“There was a relatively low level of people with bank accounts. The ratio of people that were technically unbanked and operating cash-only was very high — to the point that there are now more Bitcoin wallet users in El Salvador than individual bank accounts. So that’s a pretty interesting statistic, and it’s only been a few months, too. So it’s a very fast adoption.”
The ‘block war’ of 2017:
“It was resolved some years ago, in the sense that the Bitcoin network has clearly grown network effects and the market cap reflects that. Essentially, the main Bitcoin chain was the trade-off that the market favored. And I would argue that actually the outcome was largely decided by the market, so it’s kind of a free-market situation where the competing trade-off views were tradable, so people could trade their views. So, if they liked one of the forks, they could buy it.”
Blockstream Mining Note coming to the market?:
“It gives you the benefit of 2,000 terahash of Bitcoin mining output, so after the three-year term, you get the Bitcoin or cash equivalent of the Bitcoin if that was mined during that term. So, we put a lot of thought into the design of it from our experience of mining for many years, and we think it’s an interesting and attractive way to participate in mining, but it’s also a liquid thing. So, you’ve got a security token — a security interest, in fact — and you can over-the-counter trade it. Mid-term, we’re expecting listings that you’ll be able to trade on an actual market.”
What would Satoshi say?:
“Well, I don’t know what he’d say, but I suspect that we’re never going to find out who (Satoshi) is in the sense that it’s been quite a number of years, and a lot of people have been curious, and there doesn’t really seem to be any breadcrumbs or any information that would hint. So, what’s been said is largely speculative, really. I suspect that, because time has passed, the prospects of that are receding, essentially, so that’s my guess. And you could all imagine that he would be impressed by the progress anyway. So, for all the reasons we were discussing, the level of adoption at this stage — it’s got to be pretty unimaginable compared to 2009.”
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MORE WORD ON THE BLOCK INTERVIEWS: https://youtube.com/playlist?list=PLENVHIZFjdMT-q2_LSNncbuoS_LGiuLz2