Bitcoin Asia Review: Infrastructure is the pain point that the Bitcoin ecosystem needs to solve

Author: James Wo, Founder & CEO, Digital Finance Group

On May 9, 2024, Hong Kong welcomed the first Bitcoin Asia conference. The previous Bitcoin conferences were basically held in Europe and the United States. This move also pushed the Web3 industry in Asia to a new height. The current prosperity of the Bitcoin ecosystem is inseparable from the Asian market, which includes Asian developers and project parties. Perhaps for this reason, the Bitcoin conference chose Hong Kong as its first stop this year. At the conference, people talked most about the current status and future development of the macro Bitcoin ecosystem and Layer 2 technology. Of course, these are all centered on the financial attributes and transactions of Bitcoin. The conference site brought together exhibitors such as project parties, mining machine manufacturers, wallets, ETF exhibitors, exchanges, etc. According to my observation, there should be more than 1,500 people attending the two-day conference. The guests are also the main contributors to each link in the Bitcoin ecosystem.

Here are some of the key insights and personal thoughts I gained from the conference:

Conference Focus

The core of this conference is the display and discussion around the Bitcoin ecosystem, especially those new tools and platforms designed to optimize trading strategies and improve trading efficiency. Some of them are developed from the perspective of Layer2, and some are solved from the perspective of protogenesis links. The focus is on the core pain points of the Bitcoin network: expansion, security, and smart contracts.

Challenges in infrastructure construction

I noticed that many startup projects in the current Bitcoin ecosystem are focused on building infrastructure. The key to these projects is to increase transaction speed, ensure transaction security, and expand network capacity. These are the cornerstones that support the long-term sustainable development of the Bitcoin network. Although they face funding and technical challenges, their importance cannot be ignored. The numerous wallet exhibitors in the exhibition area also reflect the stage difference with the Ethereum ecosystem. In order to truly develop, the Bitcoin ecosystem needs more infrastructure.

The Rise of Layer 2

As a prominent theme of the conference, Layer 2 projects show how to solve the scalability problem of the network by building a new layer on top of the Bitcoin protocol. The development of such technologies is not only a cutting-edge exploration of blockchain technology, but may also lead the Bitcoin network to a more efficient and scalable future. The two most talked about projects that have already taken shape are Merlin Chain and Dovi. Merlin Chain provides governance functions through its MERL token and plays a key role in the ecosystem. Merlin Chain highlights compatibility with the Ethereum Virtual Machine (EVM), which enables it to interact seamlessly with Ethereum-based decentralized applications (dApps), thereby increasing its appeal and practicality in the broader crypto ecosystem. Dovi is a community-driven Bitcoin Layer 2 solution that integrates EVM to provide a scalable, efficient and secure smart contract platform. Dovi supports multiple asset types, including BRC20 and ARC20 tokens, making it fast and secure for cross-chain asset transfers.

Although Layer 2 technologies have high potential in theory, I think these technologies have not yet fully addressed the concerns of some investors at this stage, especially those traditional investors who are concerned about security and stability. Perhaps these conservatives need entrepreneurs to explore more direct solutions from the perspective of protogenesis. For developing applications on Layer 2, especially applications like GameFi, I think it is too early. These applications still have many infrastructure issues that need to be solved at present, such as how to improve transaction speed and processing power, which requires more technological innovation and market verification.

On the other hand, technical project parties that focus on the whole chain already have relatively mature solutions to solve the problems of cross-chain, compatibility and efficiency. For example, Zetachain, which has been very popular recently and has been listed on the Coinbase exchange, can simplify the interaction between different blockchain networks by providing cross-chain interoperability, thereby achieving a more efficient and convenient blockchain ecosystem. ZetaChain allows the flow of assets and information between different blockchain networks, solving the current blockchain island problem. Users can seamlessly transfer assets and data between different blockchains without relying on intermediaries. Zetachain is already compatible with a variety of mainstream blockchains, including Ethereum, Bitcoin, and Polkadot, providing a wide range of support to meet the needs of different users.

Communication with Bitcoin Holders

In communication with some major Bitcoin holders, I found that they can be roughly divided into two modes of thinking: one is more conservative, tending to hold Bitcoin for a long time to enjoy its appreciation over time, increase passive income, and make friends with time; the other is more willing to actively invest in supporting Bitcoin infrastructure and new projects to promote the active development of the ecosystem. During a conversation with one of the major Bitcoin holders, the other party mentioned the Babylon project. He said that if Babylon can really achieve its technical goals, he might change his conservative attitude to a more radical one. After all, DeFi Summer also made him a lot of money, and fixed income like Lido is also a way of asset appreciation that people with old money thinking like.

But in fact, he may not know that there is already a project called ZKM (zkm.io) that has achieved the sharing of native assets without adding additional security assumptions. It combines zero-knowledge proof (ZKP) and MIPS architecture to achieve the goal of efficient computing while protecting privacy. Its Entangled Rollup can verify and pass the consensus of different blockchains without additional consensus assumptions. At the same time, blockchains integrated through their zkVM can interoperate, and local liquidity can flow in different ecosystems.

Forked event before Bitcoin Asia

In the Forked event before Bitcoin Asia, DePIN and AI are still hot topics. Forked is a non-Bitcoin ecological event. Unlike other peripheral activities that focus on the Bitcoin ecosystem, the participants of the Forked event are basically Europeans and Americans. They are not as concerned about the Bitcoin ecosystem as Asians, but continue to explore the possibilities of DePIN and AI in the subsequent development of Web3. These discussions show the high attention and investment enthusiasm of different markets in these fields. Especially from the perspective of the number of participants, there are many more people than other peripheral activities that focus on the Bitcoin ecosystem.

Conclusion

Thanks to our portfolio for inviting us. DFG also participated in this Hong Kong event week as a partner of our own portfolio activities, and also felt the prosperity of the Bitcoin ecosystem. The rise of the Bitcoin ecosystem and the listing of Bitcoin ETFs in many places are undoubtedly good for the entire crypto industry. I hope to see more new technologies emerge and good projects in the coming days.