Why Bitcoin Needs Layer-2 Networks More Than Ethereum: Insights from Merlin Chain Founder

The Evolution of BTCFi: From BRC-20 to BRC-420

The emergence of decentralized finance (DeFi) on the Bitcoin network, also known as BTCFi, has gained traction with the introduction of Ordinals and BRC-20 tokens. In the 47th episode of Cointelegraph’s Hashing It Out podcast, Jeff, the founder of Merlin Chain, a native layer-2 network for Bitcoin, delves into the evolution of the BTCFi movement from BRC-20 to BRC-420, the challenges faced by layer-2 networks and Bitcoin, and the bullish impact of building utility on the network.

Jeff explains the distinction between BRC-420 and BRC-20, highlighting that while BRC-20 enables developers to create and mint tokens, BRC-420 focuses on modularized data and tokenized modules. He gives an example of how an artist can utilize BRC-420 to distribute an album on the blockchain.

According to Jeff, an artist can inscribe each song separately and then combine them into one inscription using BRC-420. The album can then be tokenized into multiple shares, allowing fans to purchase it on the blockchain.

Furthermore, Jeff emphasizes the significance of layer-2 networks for Bitcoin compared to Ethereum, as they provide use cases that cannot be built on layer-1. Unlike Ethereum, which can accommodate most innovations on layer-2 networks, Bitcoin requires a layer-2 solution to deploy smart contracts.

In a recent episode of Hashing It Out, the founder of Merlin Chain discussed the current state of layer-2 platforms in the Bitcoin community. He highlighted the fact that many of these platforms are not tailored to the specific needs of the community and are instead borrowing concepts from Ethereum layer-2s. This lack of innovation is making it difficult to generate excitement among the community, despite the potential for growth and development.

To learn more about the differences between web 1.0, 2.0, and 3.0, as well as the impact of crypto and DeFi on the future of the internet, be sure to listen to the full episode on Spotify, Apple Podcasts, or TuneIn. And for more insightful discussions on the world of cryptocurrency, check out Cointelegraph’s lineup of daily podcasts.