Major VC firm Andreessen Horowitz (abbreviated as a16z) makes no mention of Bitcoin (BTC) in his 2024 crypto asset (virtual currency) trend forecast. But they are no exception. With the excitement of a burgeoning ecosystem in Ethereum and Solana, it’s easy to see Bitcoin as old-fashioned, outdated, and boring.

But that’s a mistake. In 2024, the world will be made aware of this fact. 2024 will be the year of Bitcoin’s revenge, for better or worse.

My contradictory attitude will surprise you. But I haven’t changed my mind about Bitcoin’s transformative power. 2024 looks like the year Bitcoin will finally irreversibly break into the mainstream.

And depending on what the transition looks like, will the dream of decentralization and safe custody of assets come closer to reality, or will the Bitcoin “brand” be replaced by traditional financial giants like Vanguard and Amazon? This will determine whether it will be used as a product.

To avoid ending up with “paper Bitcoin”

The impetus for this is the impending approval of Bitcoin spot ETFs in the United States. We are about to unleash a major flow of investment in Bitcoin, the originator of crypto assets (virtual currency).

But there’s a problem. New investors are people who think they’ve invested in Bitcoin, but don’t actually touch anything that exists on-chain. ETFs are “paper bitcoins,” and just as dollar bills are not the same thing as gold, they are not real, but representations.

There is also no obvious reason to hold the underlying assets directly. There will be a world of consumer apps where people can buy, sell, trade, lend and borrow using synthetic assets that never touch the blockchain.

Bitcoin will become more prosperous, but the idea of ​​true self-custody behind it will die. How can we avoid such victories that are too costly to be worth it?

It’s about giving something to first-time HODLers (long-term holders).

Bitcoin has always been the largest crypto asset by market capitalization. But it hasn’t been a center of innovation when it comes to use cases for years.

Ethereum dominates when it comes to innovation, and popular chains like Solana have recently joined in. This has, implicitly or explicitly, led many to think of Bitcoin as a “done thing,” a finished product with lasting value but little room for growth or evolution.

Beyond a store of value

We must dispel such misconceptions. For Bitcoin to succeed in its own way, it must evolve as a technology, not just a store of value.

The stage for this is already being set with the rapid development of Layer 2 solutions like the Lightning Network, which have been widely adopted over the past year.

But while the Lightning shows what’s possible, it also serves as a stark reminder that there’s still much work to be done. In its current form, the Lightning Network has practical limitations.

For example, if fees are high, performance will drop dramatically. A recent example of this was when Nostr Assets, a lightning transaction facilitator, was forced to suspend deposits due to overwhelming demand.

The reality is that Bitcoin’s current Layer 2 does not yet have the capacity to onboard the next billion users.

The main thing Bitcoin Layer 2 should do is put Bitcoin holders into “multiplayer mode.” Users should not need Block’s “Cash App” to exchange Bitcoins, but should be able to send them quickly and easily via email or BTC native apps like Nostr.

The arrival of ETFs will greatly popularize Bitcoin. But to be truly successful, the underlying blockchain needs to become a place of play, a decentralized financial ecosystem where people can transact and develop. Above all, Bitcoin as a network should be an ecosystem where like-minded people can come together, trade, do business, and develop.

This has already been achieved with Ethereum, but not yet with Bitcoin. Most people won’t move forward with a trade if all they can do is run a lightning node.

Turn crisis into opportunity

Bitcoin must catch up with the proliferating DeFi ecosystem on other chains. We need to make the summer of 2024 the “summer of Bitcoin DeFi.”

Fortunately, 2023 shows that Bitcoin is not done innovating yet. Bitcoin, as a project, as an idea, as a community, is not dead. Developers who many thought had moved on to other chains are also coming back.

Bitcoin faces its greatest opportunity and its greatest crisis. If your ETF is approved, you will have a once-in-a-lifetime onboarding opportunity. But until the infrastructure is ready, the underlying promise of the technology will be eclipsed by the ease and convenience of “paper” assets.

The challenge for the community is to build the infrastructure that can unleash all the new activity to advance a decentralized and healthy monetary future for everyone.

Such developments are likely to catch VCs and influencers like Marc Andreessen by surprise, but the Bitcoin story is one that will surprise naysayers. is.

｜Translation and editing: Akiko Yamaguchi, Takayuki Masuda
｜Image: Shutterstock
｜Original text: 2024: The Revenge of Bitcoin