Bitcoin, the decentralized finance (DeFi) movement, has gained popularity with the introduction of Ordinals and BRC-20 tokens. In the latest episode of Cointelegraph’s Hashing It Out podcast, Jeff, the founder of Merlin Chain, a Bitcoin layer-2 network, discusses the evolution of the BTCFi movement from BRC-20 to BRC-420. He also explores the challenges faced by layer-2 networks and Bitcoin, and explains why the growing utility on the network is positive for the entire ecosystem.
Jeff distinguishes between BRC-20 and BRC-420, stating that BRC-20 enables developers to create and mint tokens, while BRC-420 focuses on modularized data and tokenized modules. He provides an example of how an artist can use BRC-420 to distribute an album on the blockchain.
According to Jeff, using BRC-420, an artist can individually inscribe five songs and then combine them into one album inscription. The artist can then tokenize the album into multiple shares, allowing fans to purchase it on the blockchain.
Jeff emphasizes the significance of layer-2 networks for Bitcoin, as they provide use cases that cannot be built on layer-1. In contrast, Ethereum can host most of the innovations developed on layer-2 networks. He highlights the limitation of deploying smart contracts on the Bitcoin network without a layer 2, unlike Ethereum.
Furthermore, Jeff notes that most Bitcoin layer-2 platforms do not cater to the specific needs of the Bitcoin community, which already engages with Ordinals and other network innovations. Instead, they borrow concepts from Ethereum layer-2s, making it challenging to generate excitement within the community.
To learn more about this topic, listen to the full episode of Hashing It Out on Spotify, Apple Podcasts, or TuneIn. And don’t forget to explore Cointelegraph’s full lineup of other shows.
Please note that this article is for informational purposes only and should not be considered as legal or investment advice. The opinions expressed are solely those of the author and do not necessarily represent the views of Cointelegraph.