Dialogue BOB Co-founder: Why is it said that "Bitcoin revival" is not just a narrative?

Interviewee: Dominik Harz, Co-founder of BOB

Interview and Author: Wendy, Foresight News

Despite facing conflicts with Bitcoin "purists," the rise of a new Bitcoin ecosystem has become one of the trends in the ever-evolving cryptocurrency market that cannot be ignored.

At the latest global industry conferences—including Token 2049, Consensus, and Foresight 2024—"Bitcoin Revival" was one of the topics discussed. Perhaps the emergence of Ordinals, which sparked significant attention and participation, already hinted at a more disruptive change in the Bitcoin ecosystem. Subsequent developments show that many Bitcoin ecosystem projects have begun to sprout during this period.

Capital injection is accelerating these changes.

In March of this year, the Europe-based BOB (Build on Bitcoin) team announced it had secured $10 million in funding, aiming to launch the first Bitcoin Layer 2 compatible with Ethereum. The Bitcoin L2 space, which was once overlooked by investors, has not only formed but has also begun to see differentiated competition. Almost simultaneously, Babylon, built on the Bitcoin ecosystem, also announced it had secured $70 million in a new funding round.

The Bitcoin ecosystem seems to be becoming "interesting." But is the so-called "Bitcoin Revival" just a narrative?

For BOB's co-founder Dominik Harz, the answer is no.

"Bitcoin Revival" is More Than Just a Narrative

"The cryptocurrency market is largely driven by narratives. But I believe there needs to be a very real foundation behind (the narrative). Bitcoin's market cap is about three times that of Ethereum. At the same time, all the innovation and new user adoption on Ethereum is concentrated in L2 solutions, such as Arbitrum and Base, which are doing exceptionally well. Therefore, if Bitcoin's market cap is three times that of Ethereum, then L2 solutions focused on Bitcoin should at least be three times that of Arbitrum and Base. This makes the Bitcoin revival very interesting."

In a recent interview, Dominik Harz explained the logical foundation of the "Bitcoin Revival" to Foresight News.

However, these facts have existed for a long time; why have investors only begun to change their attitudes in the past year or two? Even as a co-founder of the well-regarded BOB project in the Bitcoin L2 space, Dominik Harz seems to find it difficult to fully explain the reasons behind the shift in capital dynamics.

Everything seems to have happened "suddenly."

Bitcoin L2 Suddenly Gains Attention

"We started working on the (Bitcoin) L2 project back in August last year, but at that time, no one really cared. Ordinals were in their early stages, Runes didn't exist yet, and BRC-20 had just emerged. It wasn't until February of this year that people really started to pay attention. For us, the biggest event that facilitated this change was ETH Denver in March. At that time, we held a Bitcoin Revival event together with Babylon. Suddenly, everyone started to pay attention (to this direction). Now there are various Bitcoin L2s on the market, and new Bitcoin L2s are popping up everywhere."

But Dominik Harz admits, "It's a bit over the top."

"Because you can't verify anything on the Bitcoin (network). That's why we say we are a hybrid L2, because we want to reach a stage where things can be verified on Bitcoin, but right now, it's being verified on Ethereum."

The different solutions to the limitation of "not being able to verify L2 on Bitcoin from a technical perspective" have become the key to the current differentiated competition in Bitcoin L2.

Market Competition and Opportunities Coexist—Seeking Breakthrough Amid Controversy

"There must be a trade-off in how to deal with this current limitation. One option is to wait for the mainnet to launch, to wait until we have a usable version of BitVM or until we have an OP-CAT merge. But we don't want to wait for the mainnet to launch; we want to be able to build things on the Bitcoin (network) right now. So, we thought, what is the next safest thing we can do? That's why we decided to launch BOB as an OP stack rollup on Ethereum. We now have the same security assumptions as Base, Arbitrum, or Optimism. We believe this is a fairly reasonable trade-off in terms of security. We are very pragmatic in our approach. We have already launched on the mainnet. Therefore, we are now building the ecosystem. Our biggest focus now is to have usable applications that can unlock new use cases on Bitcoin."

Finding new use cases is a common challenge faced by all Bitcoin L2s—and even all L2s. Building new types of applications on the Bitcoin native system "may encounter some issues due to the limitations of the UTXO model, as well as the fact that transactions on Bitcoin can be quite expensive." Another almost universal challenge that all L2s may face is how to create a user-friendly experience. Currently, BOB users are adopting a method where all operations are automatically completed in the background through account abstraction technology, allowing users to register on the front end using email or Telegram accounts without needing to create a wallet.

On one hand, Bitcoin's massive market share provides significant potential for the development of Bitcoin-based L2s. "We believe Bitcoin is the best place to build a foundational new financial system; it is the most resilient in the entire cryptocurrency ecosystem. That's why we want to build this new ecosystem on Bitcoin rather than on Ethereum or other chains like Solana."

"Compared to Solana or Ethereum, the Bitcoin community focuses on bringing use cases to real people. What BOB is trying to do is support this desire and goal, allowing more people to join. By providing better tools for builders, enabling them to create more interesting applications. By building more tools, making it easier to get started with (Bitcoin). For example, maybe people don't want to worry about managing their seed phrases. Perhaps registering through email, Google, Apple, Facebook, or social accounts is a way to bring a large number of people on board, serving as a temporary solution until users have enough understanding of cryptocurrency and are ready to manage their own assets. There are already some good tools in these areas, but they should center around Bitcoin assets as a stable core. Then, stablecoins can be borrowed to hedge against market volatility, such as using Bitcoin loans to buy cars. Focusing on these real-world use cases that will exist even when no one is paying attention to cryptocurrency. When all the meme coins collapse in a bear market, we hope there will still be some practical use cases. We believe they will center around Bitcoin."

On the other hand, in addition to the need to find new use cases and provide users with a secure and hassle-free experience, the development of the Bitcoin ecosystem also faces the challenge of countering another strong voice within the Bitcoin ecosystem—this may be one of the unique resistances that differentiate the development of Bitcoin L2 projects from Ethereum and other decentralized network L2 projects.

For Dominik Harz, "this is a beneficial debate," as "one of Bitcoin's core values is its resilience and a very cautious attitude towards functionality. But at the same time, I believe innovation is also very important."

"BOB's positioning is that we can build a Bitcoin Layer 2 and conduct interesting developments on it without needing to change Bitcoin itself, interacting with Ordinals and the Bitcoin chain. This is also why we promote merged mining, providing miners with an additional source of income, as we want to maintain the vitality of Bitcoin and give back to the Bitcoin (community). Similarly, this is also why we promote BitVM, as it does not require changing Bitcoin's opcode structure."

"I believe there will ultimately be space to change the Bitcoin (network), especially if a ZK technology solution based on the Bitcoin network can be developed," Dominik Harz told Foresight News, noting that its energy would be very powerful, "allowing for a shift to a stronger security model."

Currently, the development of Bitcoin L2 is still in a "relatively early stage"; it is a very new concept that "has not gained enough momentum." But at the same time, from the perspective of project founders, this stage also means "it's a very new market with many opportunities."

"There are many different ways (to build Bitcoin L2); we are an Optimism rollup, and there are others doing ZK rollups. Some sidechains have not yet integrated Bitcoin well. This is very good for Bitcoin users because different companies are competing for market share and trying to advance the underlying technology. I think in the next year or two, we will see several (different) projects become leaders in this field and push it (further) forward."