In yesterday’s article, I summarized three key points about the Bitcoin ecosystem: innovation is the soul, second layer scaling is the foundation, and applications are crucial.
Today, I will continue to explore the second layer scaling and applications of Bitcoin based on these three key points.
Let’s start with Bitcoin’s second layer scaling. Among all the current second layer scaling technologies, I believe the best one is RGB++ implemented by CKB. Other second layer scaling solutions are mostly compatible with Ethereum’s EVM or use sidechains and multisig technologies. Therefore, theoretically, the second layer scaling based on the RGB++ protocol and CKB is the ideal solution.
Now let’s look at the applications within the Bitcoin ecosystem. Direct applications based on the Bitcoin mainnet (such as Unisat trading market and Bitcoin-based DEX) are still difficult for the general public to accept in terms of user experience, and most of them lack innovation. Therefore, I don’t believe they will become the mainstream of the future Bitcoin ecosystem.
On the other hand, there are two categories of applications based on second layer scaling: mainstream systems (compatible with Ethereum’s EVM, sidechains, and multisig technologies) and the highly acclaimed CKB and RGB++. The mainstream systems provide a better user experience compared to the mainnet and have attracted many users to bridge their assets to the second layer, resulting in impressive total value locked (TVL). However, these systems lack innovation and mainly replicate Ethereum’s DeFi applications.
As for CKB and RGB++, which are currently the most sought-after in terms of technology, their ecosystem is still very weak, with almost no well-known applications, only a few meme coins that hold emotional value.
Therefore, there is an awkward situation between Bitcoin’s second layer scaling and applications: the ones with average technology have acceptable applications, but they mainly imitate and copy existing applications without introducing innovative ones. On the other hand, the applications with excellent technology are weak, lacking even imitations and copies.
There is a unique sub-ecosystem centered around Bitmap and BRC-420 derivatives, but currently, these applications are still small-scale and have not gained much traction.
Overall, whether based on the Bitcoin mainnet or its second layer scaling, Bitcoin’s current applications are still far from ideal. As time goes by, if this situation does not improve, the risk to the entire ecosystem will increase, and I will pay more attention to these risks.
On the other hand, innovation is the soul of the ecosystem, and I will pay special attention to the innovations that exist only in the Bitcoin ecosystem and not in the Ethereum ecosystem.
In terms of specific actions, I will focus on the ecosystems built by CKB and RGB++, as well as the ecosystem built around Bitmap and BRC-420, because their innovations are unique.
However, I will also consider various risks and only focus on assets within these ecosystems that have minimal risks.
In a discussion on Saturday, a reader asked if they should buy Neuro Apes and Seal, which are part of the CKB ecosystem.
According to the approach I mentioned earlier, both Neuro Apes and Seal have gained popularity because people believe in the CKB and RGB++ ecosystem. But whether these projects will eventually succeed or not, there are too many unpredictable risks involved, so I will not take that risk. However, if there is a project within this ecosystem that becomes successful, it will ultimately benefit CKB.
Therefore, in this situation, I would directly buy CKB instead of investing in specific projects like Neuro Apes and Seal, which are uncertain.
Another reader mentioned that they previously invested in some projects and now the prices have dropped significantly. They want to buy more to lower the overall cost of their holdings.
I am very cautious about this approach. Among all the assets, I would only consider doing this with Bitcoin and Ethereum, and only if they have dropped below my dollar-cost averaging price. I will only take such action if the price falls below my predetermined average investment price.
As for any other assets, unless I am extremely confident in their future, I will be very careful. When many readers ask this question, I can sense from their tone that they are not very optimistic about buying at a lower price. So, whether or not to do this requires careful consideration, especially in cases where the future is unclear and there is a lot of uncertainty.
