After 2021, we entered an era of cryptocurrency where people stopped talking only about financial decentralization and started focusing largely on the tokenization of everything, thanks in part to non-fungible tokens (NFTs).
This change represents a crucial insight that should guide three theses for the next bull market. To fully understand these theses, it is essential to understand that everything is knowledge. Money is knowledge. Your engagement with a model is knowledge. Your credentials are knowledge. The ticket to your favorite gift is knowledge.
Since 2021, the ecosystem is increasingly starting to store much of this data in the form of fungible tokens, NFTs and timestamps on the blockchain, which acts as a data repository in this context.
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While not all data needs to be on the blockchain, the ability to position data on the blockchain radically transforms how we store, share, and leverage data for automated, secure directions and transactions.
Re: non-financial blockchain usage instances. pic.twitter.com/lYZFprXAry
– vitalik.eth (@VitalikButerin) May 27, 2022
And obviously, this perspective of tokenizing everything is happening to Bitcoin. This gives rise to the main thesis.
Ordinals and similar protocols continue to grow, as Bitcoin becomes a network for multi-asset (or multiple data types)
In January 2023, Casey Rodamor publicly launched the Ordinals protocol, which, in short, allows the permanent insertion of any type of file into the Bitcoin blockchain.
In less than a year, the community has already carried out experiments during which music, painting, journalistic articles, and even video games are registered on the main global blockchain.
The Ordinals protocol was not the first to enable this, but it gained the most popularity. And everything means it’s a flame that doesn’t want to come out.
More than just a technical protocol, a tradition and mindset has been created in which a growing number of developers see Bitcoin as a canvas for the creation of other initiatives and goals, and nothing can stop cultural actions well established.
Keep in mind, however: not everything needs to be 100% backed up on-chain, as this is expensive and, for some purposes, inefficient.
Therefore, protocols such as Taproot Belongings – which enable the creation of other assets – on the Bitcoin network, but in a way that keeps most information off-chain, will be essential.
Speaking of storage prices on layer 1 blockchainsit seems like layer 2 blockchains are ready to shine.
Crypto will emerge from its bubble and finally reach the everyday individual through layer 2 blockchains
Those who were active during the 2021 bull market recall that $50 for a transaction price on Ethereum was almost the norm, not to mention spikes, such as when Otherside NFTs were minted by Yuga Labs, placing customers paid up to ‘to six Ether (ETH) per transaction.
It’s simple: if the blockchain is not invisible, it will not reach the general public. And expensive and slow transactions make blockchain extremely visible.
This is why layer 2 blockchains – designed to scale layer 1 blockchains – will likely be so essential for the next bull market.
Although they have been around for years, neither they nor the market were mature enough to rely on them during the final cycle. On the one hand, many companies and manufacturers were not convinced that Layer 2s were stable enough to cope with a large influx of the general public. On the other hand, there was also the problem that, in the enthusiasm of the moment, people acted without much learning and understanding.
The number of projects unnecessarily on Ethereum was large, and the explanations varied: it was cultural, because some companies didn’t even know what secondary layers were, or simply because everyone was building on Ethereum.
Today, with all the lessons learned and the calm that has settled with the bear market, it is clear that the building mentality is much more mature, and the “jobs to be done” by blockchains have become much clearer for these. who build.
And the icing on the cake would be the implementation of EIP-4844, which should come in a few months on the Ethereum network, and would further reduce the transaction costs of layer 2 networks, making them even more invisible and stronger . to attract and retain mainstream viewers.
However, there is no point in infrastructure being invisible if people can’t connect to it and businesses can’t build on it. However, the answer is already here!
Abstraction options would be the essential gateway and retention mechanism for customers and large conventional businesses on Web3.
The big problem is that with the tokenization of everything, decentralization is sometimes more of a hindrance than a support.
If the topic is Bitcoin (BTC) custody, the subject of decentralization is relevant. However, when the topic turns to tokenized tickets or an organization’s loyalty credentials, the value is not in the decentralization of the system. Therefore, simplifying the user experience by abstracting away advanced processes – such as creating a semi-custodial wallet with social login or eliminating concerns about fuel fees – makes perfect sense and constitutes a necessity.
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Abstraction options have been the missing bridge so that the crypto universe does not become a technical environment reserved for technically expert people, ready to face many challenges and complex journeys. But now they can shine!
And it’s not about ending decentralization, but about having a possibility. Those who wish to remain 100% decentralized can achieve this, but those who do not now have the option. In this way, it prevents the crypto ecosystem from dying in the well-known abyss of innovation. Because magnificent infrastructure is useless if people cannot connect with it and easily navigate daily life.
One thing that is not usually mentioned is the importance of these abstraction options so that conventional businesses can also be part of Web3. How many companies currently have a group of developers capable of programming in blockchain languages, like Solidity? Making it easier for developers to get started can be essential.
Breaking down the blockchain journey to integration into 4 phases, let’s imagine that the account abstraction options, along with the developments discussed in the second thesis, will propel Web3 into its penultimate part – with improved infrastructure, fewer developers and technical types involved in the process. sport, and the variety of objectives, initiatives and use cases are multiplying, attracting the attention of the general public.
As of today, it is clear that major blockchains will be seen more and more as multi-asset consensus platforms in the next market cycle and less and less as currencies. The crowning achievement is the quest for scalability, which will make the layers more invisible and less complex for users and businesses to combine them. Welcome to Part Ethereum and Part 2 of Bitcoin.
Lugui Tillier is the industrial director of Lumx Studios, a Web3 studio that counts among its investors BTG Pacual Bank, the largest investment bank in Latin America. Lumx Studios already has Web3 instances with Coca-Cola, AB InBev, Nestlé and Meta. The author holds investments associated with Ordinals Protocol, although none are named in this article.
This text is intended for general informational purposes and is not intended to be and should not be considered an authorized or funding recommendation. The views, ideas and opinions expressed herein are solely those of the author and do not substantially reproduce or imply the views and opinions of Cointelegraph.
