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BITCOIN sign on a bank

Bitcoin is the most popular digital asset in the institutional trading world as it has the best trading options available, both spot and derivatives, proven track record with the longest history and availability of data. This made some of the largest financial services institutions highly interested and in 2019 we saw the birth of several bitcoin products like Bakkts physically delivered bitcoin futures, Fidelity Digital Assets bitcoin custody solution and TD Ameritrades trading offerings.

But is it also the case for the large enterprises looking at blockchain as technology and wanting to innovate using easier payments over fast and secure transaction networks and processes built around smart contracts? Can they use the bitcoin blockchain as a foundation and place their middleware stack and end-user decentralized Web 3 and decentralized finance (DeFi) applications on top?

So far the majority of enterprise-focused blockchain development has been done on permissioned and private blockchain protocols like Hyperledger Fabric and R3s Corda. This is mostly due to the fact that they offer sufficient privacy, scalability and transaction finality guarantees. Compared to them, development on top of the bitcoin blockchain was not seriously considered until recently when in May, Microsoft announced their permissionless, Decentralized Identifier (DID) network called ION running exclusively on top of the bitcoin blockchain. That triggered a shift in the sentiment that developers and enterprises should also consider bitcoin as a potential layer for enterprise blockchain development. For example, companies like Bitfury are already making significant progress with enterprise-tailored blockchain offerings like blockchain as a service (BaaS) using bitcoin as a base layer.

Lets review how bitcoin stacks up as an enterprise-ready development platform. According to a recent Ernst & Young study among decision makers across the U.S., Europe and Asia, the major reasons to consider blockchain in general are:

Preservation of data integrity In this area bitcoin is the absolute winner as the most trusted and secure public blockchain. The bitcoin blockchain is currently secured by 97 quintillion hashes per second, or EH/s. Data integrity is priority number one for the maintainers of the bitcoin blockchain and they are very restrictive about any new feature that can introduce security bugs and potentially compromise the integrity of the protocol. The accuracy and consistency of the data can be easily observed and analyzed by simple blockchain explorers as well as by using surveillance tools like Elliptic, Elementus and Chainalysis.

Bitcoin hashrate

Ability to build new revenue/business models Bitcoin currently has a $128 billion liquid market cap so building new models on top of it can unlock new significant revenue channels. Furthermore, the increased adoption of Layer 2 technology like the Lightning Network, which operate via channels and enable cheap and fast payments, will enable new business processes and ways to revenue.

Increased operational efficiency Since 2010, when certain opcodes were taken out of the core protocol, smart contracts were considered taboo in bitcoin. Lately, with the development of Blockstreams Liquid and the new RSK framework, Schnorr signatures and Taproot will make smart contractslike executions possible via sidechains.

RSK stack

Reduced costs The existence of the Lightning Network as a Layer 2 protocol on top of the bitcoin blockchain already enables cheap, private and instant transactions and payments. Of course, there are certain limitations as of now but they can be manually changed or improved in future iterations of the network.

Increased transparency This is natively supported and enforced in the bitcoin blockchain, contrary to other public protocols that incorporated privacy features like MimbleWimble, Confidential transactions, STARKs and ZK-snarks. The bitcoin core developers stayed away from such features as they can make bitcoins monetary supply of 21 million difficult to audit and verify.

Development on top of the bitcoin blockchain might be one of the major catalysts in the upcoming year. In contrast to the rest of the public chains, bitcoin is having the first-mover advantage and doesnt suffer from the same growing-pain issues as Ethereum and EOS. Overall, the security concerns most enterprise CIOs and CTOs will have with public chains are mitigated in the Layer 2/Sidechains areas. Moreover, one of the main blockchain concerns, the interoperability between networks and especially between bitcoin and others, can be explored via several ways: Keeps tBTC or an Interledger Protocol (ILP) bridge.

Bitcoin has many strong characteristics as it is the most stable and sufficiently decentralized public blockchain now. There are many teams working on a wide range of products and services on top of it, from Layer 2 to privacy, sidechains and smart contracts.

Innovations in bitcoin

Of course, a lot more will be required from bitcoin for it to become the dominant enterprise development stack. We still need to see a greater availability of development tools and IDE environments; Lightning Network should mature as a viable scaling solution and increase its adoption and usability. Soon, we will see if bitcoin can be a base layer for DeFi and match the growth Ethereum and EOS have seen. The timing cannot be better as the uncertainty around the other public chains is growing and we might see the decline of Ethereum as the dominant Web 3 platform. Regardless if that move is welcomed by the die-hard libertarians on the bitcoin platform, the companies that are building and investing on the protocol are open for enterprise customers and eventually, bitcoin will prove to its critics that its not only used for illegal activities and speculative trading.

Originally posted here:
Will 2020 Be The Year Of Enterprise Bitcoin? - Forbes