By Jonathan Hargreaves, Global Head of Growth, Elastos
This month the Elastos Foundation core team published a White Paper that outlined a new approach to Bitcoin that would enable Elastos ecosystem to develop a ‘Roll up’ to allow Bitcoin staking with other additional utility and release over $850 billion of currency into an enlarged peer-to-peer economy.
The paper outlined plans for a ‘Bitcoin roll up’, BeL2 — transforming the digital currency into a complete Layer 2 solution and addressing some of the capacity and functionality restrictions that have restrained Bitcoin from becoming a genuinely universal currency for a decentralised economy.
This Layer 2 roll-up will enable more sophisticated transactions to be conducted with Bitcoin beyond simple transfer; these include the implementation of Smart Contracts — irreversible digital agreements between two parties that can be defined, managed, tracked, (mutually) modified, and reconciled with complete integrity through a Blockchain, with no reference to (or requirement for) a third-party intermediary.
The world of Smart Contracts is effectively infinite; from the exchange of goods and services to the receipt of royalties or commissions. BeL2 means that this world will now be available to the World’s largest Blockchain community, using the Bitcoin digital currency that they know and trust.
In essence, BeL2 means that Bitcoin is now ‘smarter’ in terms of how it can facilitate a new economic mechanism. There are many ways the innovation impacts the ecosystem here are just three of the most powerful and immediate benefits for users of the currency.
- Enabling Staking Rewards
One immediate beneficiary of this month’s announcement will be Bitcoin holders who will now be able to ‘stake’ their assets directly and; in effect, earn interest on the Bitcoin in their possession. It has always been an anomaly that — unlike most other digital currencies — Bitcoin reserves remained effectively ‘dormant’ in between transactions. Bitcoin owners will now be able to put the World’s most popular, liquid and secure digital currency to work, and be remunerated for doing so. In practice, we are talking about over $750 billion in value that can be released for immediate profit to those who hold the currency regardless of the price movement of Bitcoin.
This also benefits the entire Bitcoin ecosystem specifically those securing and maintaining the network. Now, node managers, for instance, will have the opportunity to earn from their Bitcoin reserves, in the same way as owners of Ethereum and other ‘stakable’ tokens. And more Bitcoin transactions mean — not just potentially a higher Bitcoin valuation, but more opportunities to put all that dormant Bitcoin to work.
2. Lower transaction fees more activity
In addition, the roll-up will also reduce — potentially, eliminate — onerous transaction fees since the entire transaction is already Bitcoin-native, there is no bridge or third-party channel — parties can receive Bitcoin direct. The emergence of Bitcoin-denominated smart contracts also means that there will be exponentially more activity across the Blockchain, more transactions to verify, and more gas fees to earn.
3. Easy monetisation of personal content and data (for you)
BeL2 will have very real and practical implications for consumers, businesses and any organization creating value. Consumers will be able to, not only negotiate directly with sellers — whether it be for financial services or their choice of entertainment — and settle via Bitcoin (or potentially other mutually-determined currency) with absolutely no intermediary. This means consumers retain control of their personal data, they determine exactly what details are exchanged at every step, and they can conduct business safely and securely entirely on their terms.
4. A Smarter Web that puts the user in full control of his/her identity
In the broadest terms, the deployment of Bel2 allows the principles underlying the vision for a SmartWeb; an antithesis to the current scenario where the Internet is effectively mandated by a few select, third-party intermediaries.
While this is empowering for individuals for businesses, BeL2 is equally compelling: deals can now be backed by Bitcoin-denominated Smart Contracts providing transparency and security for both parties. This means, for instance, that now businesses will be able to, not just market and sell their products online, but fulfil the resulting transaction direct with the purchaser direct. The Smart Contract assures the validity of every aspect, from the terms and conditions to the integrity of the purchaser via a Digital ID (DID) process, for instance. In each case, the relationship is limited to buyer and seller, with each controlling the level and type of information shared until an agreement is reached. The absence of an intermediary means more value and autonomy for both parties, which will only increase as Bitcoin-backed Smart Contracts become more ubiquitous.
5. Migration of Real World Assets
Following the publication of the White Paper, Elastos will be announcing a series of BeL2-enabled partnerships and use cases over the coming months covering sectors such as financial services, entertainment and real-world assets (RWA).
Elastos’ BeL2 roll-up will enable any Bitcoin-denominated Smart Contract to be created, recognized, managed and exchanged directly between the two concerned parties; with no intermediary, side-chain or additional application required.
This announcement effectively makes the ‘SmartWeb’ a reality and will drive mainstream adoption of Bitcoin once and for all. Ultimately, this is the very essence and meaning of the SmartWeb.