Following the launch of the first US spot Bitcoin exchange-traded funds (ETFs) in January and last month’s Halving event, crypto investors have been waiting for the next major catalyst to propel Bitcoin to new heights beyond its current record of $73,700, set on March 14. 

According to a recent Bloomberg report, for a growing chorus of developers, the answer may lie in improving the cryptocurrency’s core blockchain with greater programmability.

The Next Chapter In Crypto? 

Bitcoin has long been viewed primarily as “digital gold,” doing little beyond basic transactions. In contrast, the Ethereum network has gained a reputation for its smart contract functionality, with applications ranging from lending and borrowing to yield farming.

A wave of upcoming new projects is working to bring this kind of programmatic flexibility to the Bitcoin blockchain. Using techniques like the “Ordinals” protocol for embedding data in BTC’s smallest unit (the satoshi), developers are reportedly opening up new possibilities for creating tokens, smart contracts, and even decentralized applications (dApps) directly on the Bitcoin network.

“It’s a huge unlock for Bitcoin,” said Kyle Samani, co-founder of crypto investment firm Multicoin Capital, which recently led a $7 million funding round for Arch, a startup building a programmable platform on top of Bitcoin. 

According to the report, Arch, which is expected to open to all developers as early as this month, will allow apps built on the Solana blockchain to be ported to run on BTC. Some 20 teams are building Ordinal-based applications for borrowing, lending, decentralized exchanges, and stablecoins.

The Layer 1 Foundation is also developing a programmable module for the BRC-20 metaprotocol, which stores executable code directly on the Bitcoin blockchain. 

This approach is said to take advantage of BTC’s relatively longer block confirmation times, 10 minutes (compared to Ethereum’s 12 seconds), to enable more complex computations. 

Can Bitcoin’s DeFi Ecosystem Eclipse Ethereum?

Despite these advances, not everyone is convinced that Bitcoin’s programmability will be the key to its next rally. Jeff Garzik, a former BTC core developer, believes that layer 2 scaling solutions will ultimately win out because they can offer cheaper transaction costs than running applications natively on the network.

Still, proponents of programmable BTC are betting that this new wave of decentralized finance (DeFi) applications could be a major driver of growth. Toby Lewis, founder of OrdinalsBot stated on the matter: 

Bitcoin’s DeFi ecosystem could grow to the largest in all of crypto. It is possible that the Bitcoin DeFi ecosystem could grow to trillions of dollars of market cap over the next few years, and it appears to be one of the major drivers of growth in crypto this cycle.

If these predictions come to fruition, the community may have found the long-awaited catalyst to ignite the cryptocurrency’s next major price surge. 

As of press time, the largest cryptocurrency by market capitalization, trades at $67,300, up by over 7% in the past seven days. 

Featured image from Shutterstock, chart from TradingView.com