Part 3: Other Honourable Bitcoin Protocols
3. Honourable mentions
1. Omni Layer
Omni Layer is a system of smart contracts that enable assets to be created and traded on a peer-to-peer distributed ledger. It is built as an extension of the Bitcoin blockchain.
Omni Layer enables users to create and trade custom tokens representing any fungible tradeable good: coins, loyalty points, gold certificates, IOUs, in-game items, etc. The Omni Layer protocol creates and destroys tokens according to rules in the token's contract that no one can change except with the agreement of all participants.
The Omni Layer uses Bitcoin's blockchain as the underlying transaction ledger but allows for customized tokens that carry additional rules and are no longer limited to simple transfers of value.
2. The Blockstack Network
The Blockstack Network is a protocol being developed on top of Bitcoin that’s designed to enable decentralized applications on the Bitcoin blockchain. The Blockstack Network is already live and actively used by businesses and developers.
Importance of Bitcoin upgrades and layer 2 applications
Bitcoin is a revolutionary technology that has the potential to disrupt many industries, but it is not without its limitations. One of the biggest issues with Bitcoin is scalability. Bitcoin can process only up to 7 transactions per second, which is far too few for a global currency.
Layer 2 applications and upgrades are essential to overcome Bitcoin's limitations and achieve global scalability. They allow bitcoin transactions to be processed on top of the blockchain without having to use all of its space.
Bitcoin upgrades are important to keep up with new technology and to improve Bitcoin's capabilities and security. One of the most vital upgrades for Bitcoin was SegWit which enabled more transactions per second and made transactions cheaper and safer.
Key Takeaways
- Bitcoin Improvement Protocols are proposed to the Bitcoin development mailing list, and if the community likes the idea, it becomes part of Bitcoin.
- It is much easier to make changes to Bitcoin than the older version of the protocol, and the community actively reviews new proposals to improve them.
- Bitcoin can process only 7 transactions per second, which is far too few for a global currency. Layer 2 applications and upgrades are essential to overcome the limitations of Bitcoin and achieve global scalability.
- Bitcoin Layer 2 projects are designed to address some of Bitcoin's scalability issues by creating two-way payment channels between two parties and periodically settling these channels so that they can be included in the blockchain.
- Bitcoin's blockchain technology allows for the creation of smart contracts, which are self-executing pieces of code.
- The Lightning Network makes Bitcoin transactions nearly instant, reduces the cost per transaction, and provides scalability by creating a system for off-chain transactions that are validated by the blockchain.
- Taro is a new Bitcoin Protocol that makes it possible to use bitcoin and other assets in your apps and trade fiat currency for bitcoin.
- Rootstock aims to provide a more complete and trustworthy financial infrastructure, allowing users to create and purchase cryptocurrencies, stocks, and bonds quickly.
- Stacks is a protocol that uses Bitcoin to run nodes, launch smart contracts, and mint NFTs. It can be used to build marketplaces, decentralized finance apps, wallets, and social networks.
- Liquid Network is an off-chain solution that aims to solve the problem of bitcoin scalability by providing a decentralized system for transferring assets between Bitcoin exchanges and other financial institutions.
- The Liquid Network can support a much higher transaction volume than the Bitcoin blockchain and has its own native currency, called L-BTC.
Wrapping up
Contrary to what some believe, Bitcoin isn’t going anywhere any time soon. Technological advancements and innovations are only just getting off the ground, and the possibilities for an exciting future built on top of the pioneer blockchain, DeFis and NFTs are endless.
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Part 1: Is Bitcoin the next Ethereum Killer?
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Disclaimer: This article is not intended to provide investment, legal, accounting, tax or any other advice and should not be relied on in that or any other regard. The information contained herein is for information purposes only and is not to be construed as an offer or solicitation for the sale or purchase of cryptocurrencies or otherwise.